Airtel has moved Competition Commission of India against Reliance Jio alleging abuse of dominant position and predatory pricing and these leading to adverse effect on competition in the sector.Airtel in a letter to CCI said that RJIL is in a dominant position as it enjoys a position of strength which enables it to operate independent of market forces. It enjoys a position of strength as it is a subsidiary of Reliance Industries Limited which is the largest enterprise in India in terms of size, revenues, assets and value.
The Sunil Mittal company said RJIL has created network infrastructure for the last 6 years without launching commercial service and with “Nil” revenue and return on investment from its telecom business. It has made investments over 1.60 lakh crores (admitted by RJIL in its information before CCI) including a staggering sum of over Rs. 47,000 crores towards acquiring Spectrum alone.
“It holds a dominant position in the Indian market of telecommunication services, considering it has the ability to operate independently of the competitive forces prevailing in the relevant market – RJIL has been operating in the telecom market even prior to the launch and had amassed over 5 million customers during the test phase itself,” it said.
Airtel further stated RJIL is able to compete irrespective of market forces and has overall spectrum holding of over 1100 MHz (Unpaired) across all bands and more specifically holds 600 MHz (Unpaired) in 2300 MHz spectrum band for offering BWA LTE Services. It has etablished distribution channel which is one of the largest in the country even before the launch
RJIL, said Bharti Airtel has abused of dominant position by indulging in predatory pricing and providing free service since December 2015 when its launched beta testing. During the test phase itself it added approximately 5 Mn users and pursant to its launch date on 5th September 2016 till 31st December 2016 as per its own press release it has grossed 72.5 Mn cutomers.
The free service provided by RJIL, is predatory in nature, which, in accordance with section 4 of the Competition Act, ex-facie constitutes abuse of dominant position, interalia because in the name of ‘beta launch’, purportedly meant for RJIL’s employees and their families, services were offered completely free of cost – i.e. neither was any amount/ charges payable for obtaining the connection, nor was any amount payable/ chargeable for the use of services – voice or data, as the case may be.
It undulged in post announcement of commercial launch, under the garb of ‘Jio Welcome Offer’ and “Happy New Year Offer” RJIL continues to provide Free service which is valid till 31 st March 2017 (with probability of further extension), operating independent of market forces, abusing its dominance as an enterprise.
Bharti said in its application to the CCI “the objective of predatory pricing by RJIL is to eliminate competition. The predatory free pricing strategy is to injure competition and thereby RJIL is creating a monopoly for itself to reaping higher profits in the long run. It is a strategic business tactic adopted to enhance market power with the objective of eliminating competition which it has succeeded to a large extent during the quarter Oct to Dec 2016 itself.”
It further said no other telecommunication operator in the Indian nmarket (or even across the world) is offering services free of cost or any free unlimited voice calling on the network of other operators, offering free voice calls cannot be said to meet the competition and fall under the exception. The same is predatory.
The move by RJIL is adversely effecting competition, Airtel said adding the customers are being enticed to free services without regard to the consequences to the health of telcom industry as a whole. The strategy of RJIL is to bind the customer to free voice and minimize competition, including eliminating competition from smaller players, to gain a higher market share. Once RJIL obtains a higher market share, it would likely increase the costs or even charge for voice calls since competition will be limited and the customer will be left with lesser number of service providers to choose from, it said.