CCI rejects Airtel's predatory pricing case against Reliance Jio

In a setback to Bharti Airtel, fair trade regulator Competition Commission of India (CCI) has rejected the case of alleged “predatory pricing” against Reliance Jio. According to CCI, just giving access for free itself is not anti-competitive.

Sunil Bharti Mittal-owned Bharti Airtel had filed the case against Mukesh Ambani-owned Reliance Jio, alleging that the latest entrant was indulging in “predatory pricing” with free services to eliminate competition in the telecom market.

Airtel had alleged that free services offered by Reliance Jio since the commercial launch from September 5, 2016, amounted to predatory pricing. It had also said Reliance Industries (RIL) had used its financial strength in other markets to enter telecom through Jio.

However, CCI, in its order said that in a competitive market scenario, where there are already big players operating in the market, it would not be “anti-competitive for an entrant to incentivise customers towards its own services by giving attractive offers and schemes.”

Such short-term business strategy of an entrant to penetrate the market and establish its identity cannot be considered to be anti-competitive in nature and as such cannot be a subject matter of investigation, CCI said.

Airtel declined to comment on the order.

Airtel, in its complaint, had also alleged that free service by Jio was an outcome of leveraging of dominant position by RIL as well as anti-competitive agreement between the two entities. However, CCI in its order said mere investments cannot be regarded as leveraging of dominant position.

“If one were to construe such investment as anti-competitive, the same would deter entry or expansion and limit the growth of markets,” the order said.

The regulator also said financial strength is relevant but not the sole factor to determine dominant position of an enterprise.

“The commission does not find it appropriate to hold Reliance Jio dominant in a scenario where its customers constitute less than 7 per cent of the total subscriber base at pan-India level,” it said. CCI said in the absence of any dominant position being enjoyed by Jio, the question of examining the alleged abuse does not arise.  “Notwithstanding this, the offers of Jio do not appear to raise any competition concern at this stage,” CCI noted.