Competition Commission of India on the Jio Competition

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Facts

Bharati Airtel had filed a case against Reliance Company claiming that the Jio service is anti-competitive and violates Section 19(1) (a) of the Competition Act, 2002. The prime concern of the Airtel was related to the free services being offered by Reliance since the inception of its Jio business i.e. from 5th September, 2016 under one offer or the other.[1] The Reliance Communications Ltd., was granted time till 3rd December, 2015 to continue offering the Jio service. But, they continued it till 31st December, 2016 against the TRAI Regulations. Thereafter, Reliance launched a new offer – ‘Happy New Year Offer’ – by which it gave all its users unlimited voice calls, data and messages until 31st March, 2017. Now, Reliance also provides an exclusive offer for iPhone users viz. ‘Jio iPhone offer’ offering unlimited local, STD, and national roaming on voice calls on any network in India, 20 GB of 4G data per month, unlimited 4G data during night, 40 GB Wi-Fi data and unlimited Short Message Service (SMS) from 1st January, 2017 to 31st December, 2017.[2]

Issues with Jio

  1. Whether Reliance is providing telecom services below its average variable cost with the sole intention of eliminating competitors?
  2. Whether there is a violation of Section 19 or 4 of the Competition Act, 2002?

Judgment

The court held in favour of Reliance Communications Ltd. It, first of all, noted that Reliance industry was a new entrant in the telecom market and commenced this business of Jio Service from 5th September, 2016. Hence, it cannot be said to be a dominant force in the telecom industry but rather a novice. Nevertheless, there was factual proof on the fact that it had made considerably strong investments for providing 2G, 3G and 4G data to the customers. Hence, the court noted in these following words :-

Considering the subscriber base, size, resources and economic power of other players in the telecom market, it is not appropriate to attribute dominant position to OP-2, who is a new entrant in the market and its offers are only in the nature of promotion and penetration to show its existence to the customers.

The court, thus, came to the conclusion that Jio service is not anti-competitive and hence, it is not violating the provisions of the Competition Act. In court’s own words, the summary of the reasons are as follows :-

However, the Informant has not demonstrated reduction of competition or elimination of any competitor nor has any intent to that effect is demonstrated. The Commission notes that providing free services cannot by itself raise competition concerns unless the same is offered by a dominant enterprise and shown to be tainted with an anti-competitive objective of excluding competition/ competitors, which does not seem to be the case in the instant matter as the relevant market is characterized by the presence of entrenched players with sustained business presence and financial strength.

[1] Bharati Airtel v. Reliance Communicatons Ltd., June, 2017

[2] Bharati Airtel v. Reliance Communicatons Ltd., June, 2017

Click here to find our coverage on the Jio Case.

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