Controversial calls on predatory pricing

Source: The post is based on an article “Controversial calls on predatory pricing” published in Business Standard on 10^th May 2023.

Syllabus: GS 3 – Industrial Policy, Infrastructure

Relevance: problems with predatory pricing

News: The article discusses concerns over predatory pricing by telecom operators.

What is the issue?

In the last month, Bharti Airtel alleged that Reliance Jio was indulging in predatory pricing. The allegation was that Jio was offering live TV channels as part of its bundled broadband plan.

However, Jio in a complaint to the Telecom Regulatory Authority of India (Trai) called Airtel’s allegation baseless.

Further, Vodafone Idea accused both Reliance Jio and Bharti Airtel of predatory pricing in their 5G data offering. However, both Jio and Airtel have denied such allegations.

Like these, there are multiple instances where one telecom operator has put charges against the other for involving in predatory pricing.

How has TRAI responded?

TRAI is keeping a closer look over telcos offering unlimited 5G data and it may lay down some rules on unlimited data.

However, the regulator would not take actions that disrupt India’s 5G growth due to various political reasons and due to India’s G20 presidency this year.

What are the concerns over predatory pricing?

Predatory pricing was a major issue a few years back when Reliance Jio entered the market with its disruptive tariff plans. Its plan resulted in decreased subscriber base of other telcos, leading to losses.

Airtel put allegation against Reliance Jio over predatory pricing back in 2017. However, its allegation was rejected by the Competition Commission of India (CCI).

CCI said that Reliance Jio is not a dominant player in the market and therefore, its plans do not involve the question of predatory pricing.

Moreover, today both Jio and Airtel are dominant players and both of them provide services like unlimited 5G data, live TV, etc., which may be a case of predatory pricing.

However, as per experts, offering extras such as live TV, more data or unlimited data cannot be categorised under predatory pricing.

Moreover, other than predatory pricing issue, concern remain over its regulation.

What are the regulatory issues over predatory pricing?

The Supreme Court in the Bharti Airtel vs CCI in 2018 authorized TRAI as the regulator to settle any case on predatory pricing in telecom. However, the Telecom Bill, which is expected soon, will bring greater clarity on the matter.

Moreover, any issue concerning predatory pricing should be first taken up by the TRAI and then any party can go to CCI for a follow-up.

However, an expert panel in 2012, has recommended mandatory consultation between CCI and the regulator concerned to arrive at a harmonious solution over the issues concerning predatory prices.

Therefore, a Telecom Bill that clarifies the regulating authority over predatory pricing is urgently needed.

Must Read: Draft Telecommunication Bill, 2022 – Explained

                     Source: Business Standard