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.
1-Mar-2018: Cabinet approves establishment of National Financial Reporting Authority.
The Union Cabinet has approved the proposal for establishment of National Financial Reporting Authority (NFRA) and creation of one post of Chairperson, three posts of full-time Members and one post of Secretary for NFRA.
The decision aims at establishment of NFRA as an independent regulator for the auditing profession which is one of the key changes brought in by the Companies Act, 2013. The inclusion of the provision in the Act was on the specific recommendations of the Standing Committee on Finance (in its 21st report).
Impact: The decision is expected to result in improved foreign/domestic investments, enhancement of economic growth, supporting the globalisation of business by meeting international practices, and assist in further development of audit profession.
Jurisdiction: The jurisdiction of NFRA for investigation of Chartered Accountants and their firms under section 132 of the Act would extend to listed companies and large unlisted public companies, the thresholds for which shall be prescribed in the Rules. The Central Government can also refer such other entities for investigation where public interest would be involved.
The inherent regulatory role of ICAI as provided for in the Chartered Accountants Act, 1949 shall continue in respect of its members in general and specifically with respect to audits pertaining to private limited companies, and public unlisted companies below the threshold limit to be notified in the rules.
The Quality Review Board (QRB) will also continue quality audit in respect of private limited companies, public unlisted companies below prescribed threshold and also with respect to audit of those companies that may be delegated to QRB by NFRA. Further, ICAI shall continue to play its advisory role with respect to accounting and auditing standards and policies by making its recommendations to NFRA.
Background: The need for establishing NFRA has arisen on account of the need felt across various jurisdictions in the world, in the wake of accounting scams, to establish independent regulators, independent from those it regulates, for enforcement of auditing standards and ensuring the quality of audits to strengthen the independence of audit firms, quality of audits and, therefore, enhance investor and public confidence in financial disclosures of companies.