Posted on January 26, 2021
Authored by Rushil Anand*
The Ministry of Ports, Shipping and Waterways recently issued the draft of the Indian Ports Bill, 2020 (“Bill”) for public consultation. The Bill aims to enable growth and development of the ports and ensure proper utilization of country’s coastline, which has been marred by a high number of existing ports that are not in an operational state. The Indian Ports Act, 1908 will be repealed and replaced with a legislation that is suited for contemporary times.
The Bill introduces three new major measures for the ports sector i.e., establishing a Maritime Port Regulatory Authority as a sector regulator; a National Port Policy, which will be set by the Central Government in consultation with the State Governments; and establishing a Maritime Ports Tribunal, which shall be an adjudicatory forum with a bench consisting of the Authority members. Maritime Ports Tribunal or the Bench will be established under Section 9 of the Bill. Upon reading the section, some serious overlap concerns are raised. In this article, the author seeks to examine the provisions of the Bill, and highlight the antitrust concerns and overlap with the Competition Act, 2002.
Section 9 of the Bill vests the Bench with a wide array of powers to deal with competition concerns in the sector. Under 9(2)(a), 9(2)(b) and 9(2)(c) the Bench can receive complaints related to any alleged anticompetitive practices or abuse of a dominant position at Scheduled Ports, as well as issues concerning port-charges levied by Scheduled Ports, and whether those port-charges may amount to or evidence an anti-competitive practice or an abuse of a dominant position. Complaint can be filed by any aggrieved person or through reference made by Central Government, State Governments or the State Maritime Board. It can also receive complaints regarding certain combinations of terminal operators that cause or are likely to cause an appreciable adverse effect on competition and make order upon or prior to the merger. Under 9(5)(ii), the Bench can pass any order or impose penalty that the Competition Commission of India (“CCI”) can pass or can be passed under Competition Act, 2002. Furthermore, under 9(6) matters pending at any court or other authority will be transferred to the Bench, clearly including matters pending at the CCI. The authority that will be created once the Bill is passed will have very significant overlaps with the CCI. The language used in Section 9 of the Bill is not very different from the language used in the Competition Act and explicitly lays down the extensive powers similar to those laid out in the Competition Act, 2002. The authority can, just like the CCI, receive complaints regarding any anti-competitive conduct, creating a scenario of concurrent jurisdiction not envisioned under either of the Acts. This can be a matter of conflict between the Maritime Tribunal and CCI, as both are empowered to receive complaints and act on them, creating a scenario for forum shopping.
The Supreme Court has laid down certain principles which can give us a brief look into how a future conflict over the overlap may playout. In the case Competition Commission of India v Bharti Airtel Limited & Ors (2018), the Supreme Court dealt with such conflict between the CCI and Telecom Regulatory Authority of India (“TRAI”). In 2016, Jio approached TRAI and alleged that Incumbent Dominant Operators or IDOs ignored its request to provide points of interconnection (POI) stating that the capacity currently available to it was inadequate and lead to call failures. The IDOs alleged it was due to Jio’s policy of offering free services that lead to congestion and eventual drop in the quality of service. Jio also approached CCI alleging cartelization by the IDOs to keep the new competitor out of the market. The IDOs approached the Bombay High Court stating that CCI did not have any jurisdiction over the matter as TRAI was the sectoral regulator and disputes of the sector were solely under TRAI’s jurisdiction. The High Court, in essence, stated since the matter was regarding telecommunication technicalities, jurisdiction would lie with TRAI and it was premature for the CCI to launch an investigation.
The Supreme Court, while upholding this view, scratched out a middle path between the two authorities stating since the dispute was primarily concerned with interpretation of interconnection agreement, it would be the sector regulator that would take the lead as the dispute is technical in nature. Hence, the complaint would lie with TRAI. However, if TRAI would establish that the IDOs have undertaken anti-competitive conduct, on the basis of those jurisdictional facts would CCI be able to proceed with the investigation. The balance between the two authorities is maintained as the TRAI would be the authority to approach for the first instance, pushing CCI’s role to a later stage, not excluding it but depending upon findings of the TRAI. TRAI cannot act even if it establishes any particular conduct was anti-competitive as its powers are limited to what is laid out in the TRAI Act. Only the CCI is empowered to deal with the anti-competitive conduct.
Applying the aforementioned reasoning of the Supreme Court to the present scenario, it may be said that the Maritime Ports Tribunal cannot entertain any matter regarding any anti-competitive conduct or impose any penalty under the Competition Act. The Supreme Court has clearly delineated where the jurisdiction of the sector regulator ends and where CCI’s jurisdiction begins, making sure the application of the Competition Act is solely CCI’s domain. This very much aligns with the how the National Competition Policy, 2011 intended that the application of Competition Act, by keeping other regulators off limits, making enforcement and penalizing under Competition Act solely CCI’s domain.
One inherent difference from the aforementioned case is the fact that Maritime Tribunal explicitly encroaches upon the jurisdiction of the CCI. The powers vested with the Maritime Tribunal are, as clear from the language of the Bill, same as what the Competition Act vests upon CCI and would be clearly encroaching upon the jurisdiction of the CCI. This would result in concurrent jurisdiction between CCI and Maritime Tribunal over anti-competition conducts in the ports sector. Two authorities having concurrent jurisdiction, while neither of them envisages the same, open up an avenue for forum shopping. Forum shopping is a practice where the litigants have an option to choose the authority where they would like to pursue their case, risk being the litigants are likely to choose the authority where they will likely get a more favorable judgement. The Supreme Court in the matter of M/s Chetak Construction Ltd. v. Om Prakash & Ors has condemned the practice of forum shopping, stating the litigant cannot be allowed the option of choosing their forum of adjudication and the same should be dealt with a heavy hand; see our analysis of the said case here. In essence, considering the principles established by the Bharti Airtel Limited judgement, the provisions of the Bill empowering the Maritime Tribunal Bill, in the author’s opinion, will be in contravention to delineation between CCI and the sector regulator while promoting the practice of forum shopping, which has been condemned by the Supreme Court itself.
The Bharti Airtel Limited case and Section 9 of the Bill are illustrations of a tussle that regularly plays out between the sector regulators and CCI. While the judgement clearly delineates the jurisdiction between them, there still exist possibilities of overlap of CCI’s jurisdiction with other sector regulators, owing to vaguely worded provisions from which powers and responsibilities of the sector regulators emanate. For example, the Central Electricity Regulatory Commission, sector regulator for the electricity sector established under Electricity Act 2003, is empowered under Section 60 of the Act to issue directions in respect of any license agreements or abuse of dominance or combinations which are likely to cause or cause an adverse effect on competition in electricity industry.
The only way forward to ensure such overlaps do not exist is by dismantling the competition jurisdiction that have been vested on different sector regulators by bringing in necessary legislative amendments. This will ensure that there is a single forum for competition matters. Furthermore, consultation under Section 21 and 21A of the Competition Act should be made mandatory. Section 21 and 21A incorporates a mechanism under which consultation can take place between CCI and sector regulators. However, due to their non-binding nature, these provisions are rarely utilized. However, by making them mandatory, along with giving CCI the primacy in competition matters, CCI will function in harmony with sector regulators, while not missing out on their opinion and sector expertise. This would also be line with the judgement of the Supreme Court.
It is important to remember that the Bill has not been passed. However, in its current state, the Bill is paving away for another overlap conflict, with an obvious outcome according to the principles laid down by the Supreme Court, wherein it was held that the primacy of the sector regulator is limited to the technical conflict between the parties and once the sector regulator has concluded its investigation only then can the CCI look into the matter whether there was any anti-competitive conduct by the parties. Sector regulator cannot look into the anti-competitive conduct even within their sector and the responsibility solely lies with the CCI. Their role is limited to establishing the jurisdictional fact that there was some form of anti-competitive conduct and on the basis of those jurisdictional facts, CCI can conduct investigation. In the author’s opinion, the Maritime Tribunal will be encroaching upon the jurisdiction of the CCI, creating an opportunity for forum shopping for litigants.
*Rushil Anand is BBA L.L.B graduate from Jindal Global Law School. He is deeply interested Competition Law and Indirect Tax matters.