INDIA BUSINESS WORLD - APRIL 1st - APRIL 15th - 2008
AIRTEL, VODAFONE ESSAR, IDEA TO FACE MRTPC PROBE
THE country’s fair trade regulator, Monopolies and Restrictive Practices (MRTP) Commission, has ordered an enquiry against leading GSM operators—Bharti Airtel, Vodafone Essar and Idea Cellular—to determine if they had formed a cartel to distort competition. The Commission, a quasi- judicial body, ordered the judicial enquiry after its investigative unit—the Director General of Investigations and Registration (DGIR)—carried out a preliminary probe as per the Commission’s direction and suggested that a detailed investigation was required, official sources said. The three telcos now face a judicial inquiry against charges that they increased cellular tariffs simultaneously.
Sources in cellphone operators said that the tariff that is now under investigation was a history since companies have further lowered prices. Bharti Airtel in an official statement said: “Bharti Airtel has always been at the forefront of mobile revolution in the country by driving affordability and offering world-class products and services to customers. We remain fully committed to offering affordable products and services.” Both Idea and Vodafone did not comment on record with regard to the development.
Admitting the DGIR’s submission, a bench of the Commission, headed by Justice O P Dwivedi, issued the “notice of enquiry”, the process that kick starts the judicial investigation against these operators. The DGIR report states that despite having different cost factors, structures and profits, the three telcos had jointly increased their local call rates to Rs 1.20 a minute. It also adds that while telecom tariffs are under forbearance, (which implies that service providers are free to decide call rates), “it cannot be mere coincidence that the tariff revision by them is of identical scale.” The three operators have been given three weeks to file their reply.
If found guilty, the Commission can ask the companies to stop the practise of raising prices simultaneously in an order called the ‘cease and desist order.’ Non-compliance by the companies would invite contempt of court proceedings and prosecutions.
The DGIR had pointed that while the area of operation, number of subscribers and the operational costs of the three telcos were different, the three service providers had still arrived that the same tariff rates.
The issue refers to August 2007, when all the three companies increased local call rates on select tariff plans to Rs 1.20 a minute from Re one a minute earlier. The three operators had also hiked the SMS tariffs to Rs 1.20 from Re one. Between them, these three players control over 60% of India’s GSM market. In September, 2007, taking suo moto cognizance, the MRTPC directed the DGIR to investigate the issue and submit a report. The Commission will next hear the matter on July 31, 2008.
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