Airtel files complaint with CCI against Reliance Jio over pricing

Reliance Jio’s ‘predatory free pricing strategy’ is to ‘injure competition’, says Airtel in letter to Competition Commission of India


The launch of Reliance Jio, in which parent Reliance Industries Ltd has invested a staggering $25 billion, has  effected a consolidation in India’s telecom industry. Photo: Indranil Bhoumik/Mint
The launch of Reliance Jio, in which parent Reliance Industries Ltd has invested a staggering $25 billion, has effected a consolidation in India’s telecom industry. Photo: Indranil Bhoumik/Mint

India’s largest telecom service provider Bharti Airtel Ltd has filed a complaint against Reliance Jio Infocomm Ltd with Competition Commission of India (CCI), accusing the latter of “creating a monopoly for itself” to reap higher profits in the long run.

In a letter dated 2 February addressed to the competition watchdog, Airtel said Jio’s “predatory free pricing strategy” is to “injure competition”.

“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,” Airtel said in the letter, extracts of which have been reviewed by Mint.

“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.

“This latest salvo by Airtel is a clear ploy to divert attention from its own violation of licensing conditions by having denied adequate POIs to Jio and the already announced censure proceedings by the Trai against them. Airtel is also acting against consumer interest by stridently opposing the ‘free voice’ benefit that Jio has been able to provide customers due to its superior next generation IP based technology,” said a Reliance Jio spokesperson.

“All tariff plans of Jio have been found to be non-predatory by the regulator, so the question of our offerings being predatory does not arise. India’s telecom sector has tended to progress due to disruptive innovation brought in by a new comer, but unfortunately, the incumbents led by Airtel have always tried to block such initiatives,” the spokesperson added.

An Airtel spokesperson declined to comment.

The launch of Reliance Jio, in which parent Reliance Industries Ltd has invested a staggering $25 billion, has effected a consolidation in India’s telecom industry. Since the launch of its services in September, Jio has offered free voice and data and signed up more than 72 million users, forcing rivals, including Vodafone India and Idea, to slash tariffs in response. To take on Jio, Vodafone Group Plc’s Indian unit is in merger talks with Aditya Birla-promoted Idea Cellular Ltd. Jio’s entry has also forced rivals to make huge investments, leading to mounting debts for all operators. Vodafone Group had to write off €5 billion in its Indian business last year and defer a proposed share sale which will become irrelevant should the merger go through.

Airtel’s complaint to CCI broadly accuses Jio of “indulging in abuse of dominant position”, predatory pricing by offering free services, and adversely affecting competition by way of predatory pricing, anti-competitive behaviour and activities.

The move is the latest in a series of accusations and counter-accusations between the Mumbai-based company, promoted by Mukesh Ambani’s Reliance Industries, and Sunil Mittal’s Bharti Airtel Ltd. Mittal’s firm is battling free services offered by Jio in the Telecom Disputes and Settlement Appellate Tribunal (TDSAT) by raising questions about the validity of the extension of its free offer period till March 2017 and accusing Telecom Regulatory Authority of India (Trai) of inaction against Jio. TDSAT is expected take up the matter on Monday after sector regulator Trai’s submission that Jio’s Happy New Year is not in violation of the regulatory guidelines on promotional offer.

Jio, too, has reached out to Trai, asking it to “impose the highest penalty on Airtel”, accusing the market leader of “misrepresenting the benefits” of its free unlimited calls and free data plans.

In its letter to CCI, Airtel said that no other telecommunication operator in the Indian market 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,” it said.

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