Scatmag.com

November 2019

COURT REJECTS CCI PROBE AGAINST STAR & SONY



In a relief to Sony Pictures Network India and Star India, Justices Akil Kureshi and SJ Kathawalla of the Bombay High Court quashed an order passed by the Competition Commission of India (CCI) to probe the broadcasters for alleged price discrimination against NSTPL's HITS platform.


CCI Ought To Have Formed A Prima Facie View That There Exists An Agreement Between Star/Sony & NSTPL For A Refusal Of Services - Court Verdict



THE CASE

On July 27, 2018 the CCI Bench headed by Chairperson Sudhir Mittal had ordered a probe against Star India & Sony Pictures Network India for indulging in anti-competitive behavior regarding pricing of television channels to NSTPL's HITS platform.

Star & Sony challenged the CCI's order directing a probe on a complaint filed by Noida Software Technology Park Ltd (NSTPL) alleging that Star & Sony demanded exorbitant Pay channel prices from NSTPL's HITS platform. The NSTPL HITS platform ultimately shut down, due to lack of pay channels.


CCI ORDER

The CCI, in its order, had stated that the broadcasters appeared prima facie in contravention to Section 3 (4) of the Competition Act, which prohibits anti-competitive agreements.





THE ARGUMENTS

Appearing for Star India, Senior Counsel Darius Khambata submitted that the CCI order was passed without jurisdiction as laid down by the Supreme Court verdict in CCI v Bharti Airtel. In that matter, the Apex Court had ruled that CCI can exercise its jurisdiction only if & when TRAI or the TDSAT found that parties have indulged in anticompetitive practices. In this case, the matter is still pending adjudication before the TDSAT.

Appearing for Sony Pictures, Senior Counsel Soli K Cooper submitted that the CCI has failed to arrive at prima facie finding as to the existence of an agreement that constituted a refusal to deal and whether the agreement is likely to cause an Appreciable Adverse Effect on Competition (AAEC) in India.

For the CCI, Advocate Somasekhar Sundaresan submitted that the telecom regulatory system, earlier in December 2015, had effectively and conclusively ruled that there is anti-competitive behavior in the relevant market in the present case.

Appearing for complainant Noida Software Technology Park Limited (NSTPL), Advocate ZT Andhyarujina submitted that the CCI had the necessary jurisdiction to take cognizance.



"The Supreme Court Mandates That Unless TRAI Finds Fault With The Conduct Of A Service Provider, CCI Cannot Order An Investigation."



VERDICT

The High Court ruled against the CCI.

It referred to the CCI vs Bharti Airtel case, regarding the CCI's jurisdiction. "The Supreme Court's decision clearly mandates that unless TRAI finds fault with the conduct of a service provider, CCI cannot order an investigation."

It further observed "In order to hold a prima facie contravention of Section 3(4), CCI ought to have formed a prima facie view that there exists an agreement between Star/Sony which provides for a refusal to produce, supply, distribute, store or trade in goods or provision of services .. and that such agreement causes AAEC [Appreciable Adverse Effect on Competition].

The HC also said that "AAEC would be an essential and mandatory finding before CCI could direct investigation." The CCI order "lacks this necessary finding" and hence it "cannot be sustained on this count alone." n