14-Dec-2018: TDSAT junks Trai's predatory pricing order

Telecom tribunal TDSAT has set aside sector regulator Trai's rule on predatory pricing for lack of transparency in the guidelines over determining market share and rates of services.

The move comes as a major relief to Bharti Airtel, Vodafone and Idea Cellular (Now Vodafone-Idea Ltd) which had in March challenged the amendment made by Trai in the Telecommunication Tariff order.

"The impugned tariff amendment order is set aside in so far as it changes the concept of SMP (significant market player), non-predation and the related provisions," TDSAT Bench comprising Justice SK Singh and member AK Bhargava said in an order dated December 13, 2018.

Telecom Disputes Settlement and Appellate Tribunal(TDSAT) ordered Trai to rework the predatory pricing rule within six months. TDSAT further held that segmented offers and discounts offered in ordinary course of business to existing customers without any discrimination within the targeted segment do not amount to a tariff plan and therefore "need no reporting in manner prescribed for regular tariff plans".

Moreover, instead of reporting of all such discounted offers not falling within the cap of 25 tariff plans, Trai may call for details of any segmented offer about which it may receive specific complaints.

In February 2018, Trai said it will impose financial disincentive of up to Rs 5 million per circle on operators if their service rates are found to be predatory in nature.

The amendment was issued after old telecom operators Airtel, Vodafone and Idea alleged that Reliance Jio is offering services at predatory rates.

Trai's rule considered a tariff predatory if in a "relevant market" a telecom operator with over 30 per cent market share offers services at a price which is below the average "variable cost", with a view to reduce competition or eliminate the competitors.

Trai will arrive at "variable cost" after deducting fixed cost and share of fixed overheads borne by the company from total cost incurred by it for running business during the period under review.

The regulator has also said that telcos will have to provide services to all subscribers availing the same tariff plan in a non-discriminatory manner.