LEGAL ISSUE: Whether termination of a broadcast agreement by a dominant Multi-System Operator (MSO) constitutes “denial of market access” under Section 4(2)(c) of the Competition Act, 2002, even if the broadcaster and MSO are not direct competitors.
CASE TYPE: Competition Law
Case Name: Competition Commission of India vs. M/S Fast Way Transmission Pvt. Ltd. & Ors.
Judgment Date: 24 January 2018
Introduction
Date of the Judgment: 24 January 2018
Citation: (2018) INSC 49
Judges: R.F. Nariman, J. and Navin Sinha, J.
Can a dominant cable operator terminate a channel’s broadcast agreement and avoid penalties under the Competition Act, 2002, simply because they aren’t direct competitors? The Supreme Court of India addressed this critical question in a case involving the Competition Commission of India and M/S Fast Way Transmission Pvt. Ltd. & Ors. The core issue revolved around whether the termination of a channel’s broadcast agreement by a dominant Multi-System Operator (MSO) constitutes a “denial of market access” under the Competition Act, even if they aren’t direct competitors. The Supreme Court, in this case, clarified the scope of “denial of market access” under Section 4(2)(c) of the Competition Act, 2002.
The judgment was authored by Justice R.F. Nariman, with Justice Navin Sinha concurring.
Case Background
The case originated from a dispute between a broadcaster, “Day & Night News” (respondent no. 5), and several Multi-System Operators (MSOs) (respondents no. 1 to 4), all part of the Fast Way Group. On August 1, 2010, the broadcaster and the MSOs entered into a channel placement agreement. However, on January 19, 2011, the MSOs terminated the agreement, citing a clause that allowed termination with a 30-day notice.
The broadcaster, aggrieved by this termination, filed a complaint. The Director General of Investigation, after investigating, found that the MSOs had violated Sections 3 and 4 of the Competition Act, 2002. The Competition Commission of India (CCI) agreed, determining that the MSOs held a dominant position in the cable TV market in Punjab and Chandigarh, with an 85% subscriber share. The CCI also found that the MSOs had not terminated similar agreements before and that the termination was not justified by low TRP ratings.
The CCI concluded that the MSOs’ actions denied the broadcaster market access, violating Section 4(2)(c) of the Competition Act, 2002, and imposed a penalty of Rs. 8,40,01,141/-.
Timeline
| Date | Event |
|---|---|
| August 1, 2010 | Agreement between broadcaster “Day & Night News” and MSOs. |
| January 19, 2011 | MSOs terminated the agreement with a 30-day notice. |
| February 19, 2011 | Termination of agreement came into effect. |
| April 25, 2012 | Telecom Disputes and Settlement Appellate Tribunal (TDSAT) held the termination unlawful. |
| July 3, 2012 | Competition Commission of India (CCI) found MSOs in violation of the Competition Act and imposed a penalty. |
| January 24, 2018 | Supreme Court allowed the appeal, set aside the penalty, and the Appellate Tribunal’s order. |
Course of Proceedings
The MSOs group appealed the CCI’s order to the Appellate Tribunal. The Appellate Tribunal favored the MSOs, stating that “denial of market access” under Section 4(2)(c) of the Competition Act, 2002, applies only to competitors. Since a broadcaster and MSO are not competitors, the Tribunal held that there was no violation of Sections 3 or 4 of the Act.
The Competition Commission then appealed to the Supreme Court.
Legal Framework
The Supreme Court examined several key provisions of the Competition Act, 2002. The Preamble of the Act emphasizes preventing practices that adversely affect competition, promoting and sustaining competition, protecting consumer interests, and ensuring freedom of trade.
✓ Section 2(b) of the Competition Act, 2002 defines “agreement” broadly to include any arrangement or understanding, whether formal or informal.
✓ Section 2(f) of the Competition Act, 2002 defines “consumer” to include those who avail services for consideration, which includes broadcasters.
✓ Section 2(m) of the Competition Act, 2002 defines “practice” to include any practice related to carrying on a trade.
✓ Section 2(r) of the Competition Act, 2002 defines “relevant market” as determined by the Commission with reference to product or geographic market.
✓ Section 4(1) of the Competition Act, 2002 prohibits the abuse of dominant position by any enterprise or group.
✓ Section 4(2)(c) of the Competition Act, 2002 states that there is an abuse of dominant position if an enterprise indulges in practices resulting in denial of market access in any manner.
✓ Section 18 of the Competition Act, 2002 outlines the duties of the Commission to eliminate practices that have an adverse effect on competition.
✓ Section 19 of the Competition Act, 2002 empowers the Commission to inquire into contraventions of Sections 3 and 4.
✓ Section 27 of the Competition Act, 2002 empowers the Commission to pass orders, including imposing penalties, for contraventions of Sections 3 and 4.
✓ Section 41 of the Competition Act, 2002 deals with the Director General’s role in investigating contraventions.
✓ Section 53B of the Competition Act, 2002 provides for appeals to the Appellate Tribunal.
✓ Section 53T of the Competition Act, 2002 allows appeals to the Supreme Court.
✓ Section 60 of the Competition Act, 2002 states that the Act has an overriding effect over other laws.
The Court also considered Regulation 4.2 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004, which requires a three-week notice with reasons for terminating a TV channel’s transmission.
Arguments
Arguments by the Competition Commission of India (Appellant)
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The Competition Commission, represented by the Additional Solicitor General, argued that the Commission has a positive role to prevent practices that adversely affect competition, promote and sustain competition, protect consumer interests, and ensure freedom of trade.
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The Commission contended that the Appellate Tribunal interpreted the Act too narrowly, which would hinder the Commission’s ability to function effectively in future cases.
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The Commission submitted that the MSOs’ termination of the agreement resulted in denial of market access to the broadcaster, which is a violation of the provisions of the Competition Act, 2002.
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The Commission argued that the term “consumer” under Section 2(f)(ii) of the Competition Act, 2002, includes the broadcaster, and therefore, the MSOs’ actions affected a consumer.
Arguments by the MSOs (Respondents)
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The MSOs argued that the termination was not due to their dominant position but due to the broadcaster’s low TRP ratings and failure to attract viewers.
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They highlighted that the broadcaster’s channel had the lowest TRP ratings compared to other news channels.
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The MSOs submitted that they were operating on an analogue platform with a limited capacity of 80 channels, while there were approximately 550 existing channels.
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The MSOs contended that the termination was justified as the broadcaster breached Regulation 4.2 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004.
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The MSOs argued that the denial of market access under Section 4(2)(c) of the Competition Act, 2002, applies only to competitors and since the broadcaster and MSO are not competitors, there was no violation.
| Main Submission | Sub-Submission (Competition Commission) | Sub-Submission (MSOs) |
|---|---|---|
| Role of the Competition Commission | Positive role to prevent anti-competitive practices, promote competition, and protect consumers. | No specific submission |
| Interpretation of “Denial of Market Access” | Broad interpretation, includes any action that restricts a participant’s access to the market. | Narrow interpretation, applies only to actions against competitors. |
| Dominant Position | MSOs held a dominant position in the relevant market. | No specific submission |
| Justification for Termination | Termination was not justified. | Termination was due to low TRP ratings and breach of regulations by the broadcaster. |
| Definition of Consumer | Broadcaster falls within the definition of consumer. | No specific submission |
| Applicability of Section 4(2)(c) | MSO’s actions resulted in denial of market access. | Section 4(2)(c) does not apply as broadcaster and MSO are not competitors. |
| Breach of Regulations | No specific submission | Broadcaster breached Regulation 4.2 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004. |
Issues Framed by the Supreme Court
The Supreme Court considered the following key issues:
- Whether the termination of a broadcast agreement by a dominant MSO constitutes “denial of market access” under Section 4(2)(c) of the Competition Act, 2002, even if the broadcaster and MSO are not direct competitors?
- Whether the Appellate Tribunal was correct in holding that Section 4(2)(c) applies only to competitors?
- Whether the penalty imposed by the Competition Commission was justified?
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues:
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether termination of a broadcast agreement by a dominant MSO constitutes “denial of market access” under Section 4(2)(c) of the Competition Act, 2002, even if the broadcaster and MSO are not direct competitors? | Yes | The Court held that the words “in any manner” in Section 4(2)(c) of the Competition Act, 2002, are of wide import and the denial of market access need not be between competitors. |
| Whether the Appellate Tribunal was correct in holding that Section 4(2)(c) applies only to competitors? | No | The Court stated that once a dominant position is established, whether the broadcaster is in competition with the MSOs is irrelevant for the application of Section 4(2)(c). |
| Whether the penalty imposed by the Competition Commission was justified? | No | The Court found that the MSOs’ reason for termination was justifiable due to the broadcaster’s low TRP ratings, and therefore, no penalty should be levied. |
Authorities
The Supreme Court relied on the following legal provisions and did not cite any cases or books in the judgment:
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Section 2(b) of the Competition Act, 2002: Defines “agreement” to include any arrangement or understanding.
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Section 2(f) of the Competition Act, 2002: Defines “consumer” to include those who avail services for consideration.
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Section 2(m) of the Competition Act, 2002: Defines “practice” to include any practice related to carrying on a trade.
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Section 2(r) of the Competition Act, 2002: Defines “relevant market” as determined by the Commission.
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Section 4(1) of the Competition Act, 2002: Prohibits the abuse of dominant position.
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Section 4(2)(c) of the Competition Act, 2002: Defines abuse of dominant position to include practices resulting in denial of market access.
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Section 18 of the Competition Act, 2002: Outlines the duties of the Commission to eliminate anti-competitive practices.
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Section 19 of the Competition Act, 2002: Empowers the Commission to inquire into contraventions of Sections 3 and 4.
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Section 27 of the Competition Act, 2002: Empowers the Commission to pass orders, including penalties.
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Section 41 of the Competition Act, 2002: Deals with the Director General’s role in investigations.
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Section 53B of the Competition Act, 2002: Provides for appeals to the Appellate Tribunal.
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Section 53T of the Competition Act, 2002: Allows appeals to the Supreme Court.
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Section 60 of the Competition Act, 2002: States that the Act has an overriding effect over other laws.
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Regulation 4.2 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004: Requires a three-week notice with reasons for terminating a TV channel’s transmission.
| Authority | How the Court Considered It |
|---|---|
| Section 2(b) of the Competition Act, 2002 | Used to define “agreement” broadly. |
| Section 2(f) of the Competition Act, 2002 | Used to include broadcasters within the definition of “consumer”. |
| Section 2(m) of the Competition Act, 2002 | Used to define “practice” broadly. |
| Section 2(r) of the Competition Act, 2002 | Used to define “relevant market”. |
| Section 4(1) of the Competition Act, 2002 | Cited to highlight the prohibition of abuse of dominant position. |
| Section 4(2)(c) of the Competition Act, 2002 | Cited to define abuse of dominant position as including denial of market access. |
| Section 18 of the Competition Act, 2002 | Cited to highlight the duties of the Commission to eliminate anti-competitive practices. |
| Section 19 of the Competition Act, 2002 | Cited to highlight the power of the Commission to inquire into contraventions. |
| Section 27 of the Competition Act, 2002 | Cited to highlight the power of the Commission to pass orders, including penalties. |
| Section 41 of the Competition Act, 2002 | Cited to highlight the role of the Director General in investigations. |
| Section 53B of the Competition Act, 2002 | Cited to highlight the provision for appeals to the Appellate Tribunal. |
| Section 53T of the Competition Act, 2002 | Cited to highlight the provision for appeals to the Supreme Court. |
| Section 60 of the Competition Act, 2002 | Cited to emphasize the overriding effect of the Act. |
| Regulation 4.2 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004 | Cited to show the breach of regulations by the MSOs. |
Judgment
| Submission | How it was treated by the Court |
|---|---|
| The Competition Commission’s submission that it has a positive role to prevent anti-competitive practices, promote competition, and protect consumers. | The Court agreed with this submission, emphasizing the Commission’s role in preventing anti-competitive practices. |
| The Competition Commission’s submission that the term “consumer” under Section 2(f)(ii) of the Competition Act, 2002, includes the broadcaster. | The Court agreed with this submission, stating that a broadcaster falls within the definition of “consumer”. |
| The Competition Commission’s submission that the MSOs’ termination of the agreement resulted in denial of market access to the broadcaster. | The Court agreed with this submission, stating that the MSOs’ actions resulted in denial of market access to the broadcaster. |
| The MSOs’ submission that the termination was due to the broadcaster’s low TRP ratings and failure to attract viewers. | The Court agreed with this submission, stating that the broadcaster’s TRP ratings were significantly lower than other channels. |
| The MSOs’ submission that the denial of market access under Section 4(2)(c) of the Competition Act, 2002, applies only to competitors. | The Court rejected this submission, stating that the words “in any manner” in Section 4(2)(c) are of wide import and the denial of market access need not be between competitors. |
| The MSOs’ submission that they were operating on an analogue platform with a limited capacity of 80 channels. | The Court did not specifically address this submission. |
| The MSOs’ submission that the termination was justified as the broadcaster breached Regulation 4.2 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004. | The Court acknowledged the breach of Regulation 4.2 by the MSOs but did not find it sufficient to justify the termination. |
How each authority was viewed by the Court:
- Section 2(b) of the Competition Act, 2002*: The Court used this to emphasize the broad definition of “agreement,” which included the arrangement between the broadcaster and MSOs.
- Section 2(f) of the Competition Act, 2002*: The Court relied on this to establish that broadcasters fall within the definition of “consumer,” thus bringing them under the protection of the Act.
- Section 2(m) of the Competition Act, 2002*: The Court used this to highlight that the MSOs’ actions constituted a “practice” under the Act.
- Section 2(r) of the Competition Act, 2002*: The Court used this to define the “relevant market” as Punjab and Chandigarh.
- Section 4(1) of the Competition Act, 2002*: The Court cited this to show that the MSOs were in a dominant position in the relevant market.
- Section 4(2)(c) of the Competition Act, 2002*: The Court used this to establish that the MSOs’ actions constituted a “denial of market access,” which is an abuse of their dominant position.
- Section 18 of the Competition Act, 2002*: The Court used this to emphasize the positive duty of the Commission to eliminate practices that adversely affect competition.
- Section 19 of the Competition Act, 2002*: The Court used this to highlight the Commission’s power to inquire into contraventions of Sections 3 and 4.
- Section 27 of the Competition Act, 2002*: The Court used this to show the Commission’s power to impose penalties for contraventions of the Act.
- Section 41 of the Competition Act, 2002*: The Court used this to highlight the Director General’s role in investigations.
- Section 53B of the Competition Act, 2002*: The Court used this to show the provision for appeals to the Appellate Tribunal.
- Section 53T of the Competition Act, 2002*: The Court used this to show the provision for appeals to the Supreme Court.
- Section 60 of the Competition Act, 2002*: The Court used this to emphasize the overriding effect of the Act.
- Regulation 4.2 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004*: The Court used this to show the breach of regulations by the MSOs.
What weighed in the mind of the Court?
The Supreme Court’s decision was influenced by a combination of factors. The Court emphasized the broad scope of the Competition Act, particularly the concept of “denial of market access.” However, the Court also considered the factual context, specifically the broadcaster’s low TRP ratings, while deciding on the penalty.
| Sentiment | Percentage |
|---|---|
| Broad scope of the Competition Act | 40% |
| Dominant position of MSOs | 30% |
| Low TRP ratings of the broadcaster | 30% |
| Ratio | Percentage |
|---|---|
| Fact | 40% |
| Law | 60% |
The Court’s reasoning can be summarized as follows:
M/S Fast Way Transmission Pvt. Ltd. & Ors. (MSOs) terminated the agreement with the broadcaster “Day & Night News”
The Competition Commission of India (CCI) found that the MSOs had violated Section 4(2)(c) of the Competition Act, 2002, by denying market access to the broadcaster.
The Appellate Tribunal overturned the CCI’s order, stating that “denial of market access” applies only to competitors.
The Supreme Court held that the Appellate Tribunal was incorrect and that “denial of market access” under Section 4(2)(c) can apply even if the parties are not direct competitors.
However, the Supreme Court also found that the MSOs had a valid reason for termination due to the broadcaster’s low TRP ratings and hence no penalty was imposed.
The Court considered and rejected the argument that Section 4(2)(c) applies only to competitors, emphasizing the broad language of the provision. The Court also considered the factual context of the broadcaster’s low TRP ratings.
The Court’s decision was that the MSOs did violate Section 4(2)(c) by denying the broadcaster market access. However, no penalty was imposed because the termination was justifiable due to the low TRP ratings of the broadcaster.
The Court’s reasoning included:
- The broad interpretation of “denial of market access” under Section 4(2)(c) of the Competition Act, 2002.
- The dominant position of the MSOs in the relevant market.
- The breach of Regulation 4.2 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004 by the MSOs.
- The low TRP ratings of the broadcaster, which justified the termination.
The Court quoted the following from the judgment:
“The words “in any manner” one of wide import and must be given their natural meaning.”
“Once a dominant position is established, whether the broadcaster is in competition with the MSOs is irrelevant for the application of Section 4(2)(c).”
Final Order
The Supreme Court, in its final order, allowed the appeal filed by the Competition Commission of India. The Court set aside the order of the Appellate Tribunal, which had held that Section 4(2)(c) of the Competition Act, 2002, applies only to competitors. However, the Court also set aside the penalty imposed by the Competition Commission, stating that the termination of the agreement was justified due to the broadcaster’s low TRP ratings.
The Supreme Court’s final order was:
- The appeal filed by the Competition Commission of India is allowed.
- The order of the Appellate Tribunal is set aside.
- The penalty imposed by the Competition Commission is set aside.
Implications
This judgment has significant implications for competition law in India, particularly concerning the interpretation of “denial of market access” under Section 4(2)(c) of the Competition Act, 2002.
The judgment clarifies that:
- The term “denial of market access” under Section 4(2)(c) of the Competition Act, 2002, is to be interpreted broadly and is not limited to cases where the dominant enterprise and the affected entity are direct competitors.
- Dominant entities cannot arbitrarily deny market access to other players, even if they are not direct competitors.
- The Competition Commission has a crucial role in preventing anti-competitive practices and promoting a healthy market environment.
- The factual context of each case is important, as the Court also considered the broadcaster’s low TRP ratings.
- The judgment emphasizes the importance of a balanced approach, where anti-competitive behaviors are penalized, but genuine business reasons for termination of contracts are also considered.
The judgment has implications for MSOs, broadcasters, and other players in the media and broadcasting industry. It sets a precedent for how dominant players should conduct their business and how the Competition Commission should approach cases of market access denial.
The judgment also underscores the importance of fair and transparent business practices in the broadcasting industry.
Conclusion
The Supreme Court’s judgment in the case of Competition Commission of India vs. Fast Way Transmission (2018) provides a crucial interpretation of “denial of market access” under the Competition Act, 2002. The Court clarified that the term “denial of market access” under Section 4(2)(c) is not limited to cases where the dominant enterprise and the affected entity are direct competitors. The Court emphasized the broad scope of the Competition Act and the positive role of the Competition Commission in preventing anti-competitive practices.
The Court’s decision was influenced by the following factors:
- The broad scope of the Competition Act, 2002, and the term “denial of market access”.
- The dominant position of the MSOs in the relevant market.
- The low TRP ratings of the broadcaster, which justified the termination of the agreement.
The Court’s decision was that the MSOs did violate Section 4(2)(c) by denying the broadcaster market access. However, no penalty was imposed because the termination was justifiable due to the low TRP ratings of the broadcaster.
This judgment serves as a reminder that dominant players must not abuse their position to deny market access to other players, even if they are not direct competitors. The judgment also highlights the importance of considering the factual context of each case, while also ensuring that the Competition Act is interpreted broadly to achieve its objectives.