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MRTPC suspects Airtel-Vodafone cartel, orders probe into tariff hikes news
Our Corporate Bureau
12 September 2007

Telecom majors Bharti Airtel and Vodafone Essar will face a probe over suspected cartelisation and unfair trade practices through coordinated increases in tariff. Anti-monopoly watchdog Monopolies and Restrictive Trade Practices Commission (MRTPC) has ordered a probe into the recent tariff hikes announced by the companies.

A consumer organisation had earlier challenged the tariff hike before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), even as the department of telecommunications (DoT) referred the matter to the Telecom Regulatory Authority of India (TRAI).

MRTPC has directed its investigative arm, the Director General of Investigation and Registration (DGIR), to conduct an enquiry into the manner in which the two companies raised tariffs last month. Sources said the MRTPC suspects the two telecom service operators of having formed a cartel and distorting competition in the market.

Section 10 of the MRTP Act, 1969, prohibits cartelisation in any industry and says it is a restrictive trade practice as it imposes an unjustified burden on consumers. Sources said the MRTPC took suo motu cognisance of media reports about the price hike being almost simultaneous, which it suspects was a co-ordinated action. Idea Cellular may also be included in the probe later, sources added.

The Commission also noted that the operators did not even bother to inform their customers about the price hike. This might be an unfair trade practice by the companies.

MRTPC has asked DGIR to submit a preliminary investigation report within 60 days. DGIR would be issuing notices to these companies to furnish documents supporting their claims for increasing the tariffs. If DGIR finds evidence of any such cartelisation or of adoption of unfair trade practices, then the Commission may issue notices to them and could start a judicial inquiry against these operators.

The MRTPC move comes days after TDSAT hauled up telecom regulator TRAI for not intervening when Bharti Airtel, Vodafone Essar and Idea Cellular hiked local call charges on select tariff plans by 20 per cent last month. Earlier, Bharti, Idea and Vodafone Essar had hiked STD tariffs for pre-paid users by over 10 per cent.

Denying any cartelisation, telcom service operators say further hikes are imminent, as telecom service usage remains low despite a swelling subscriber base. They say there will be more hikes as operators rationalise their below-cost populist schemes.

Bharti Airtel chairman Sunil Mittal recently said in an interview that mobile call charges could not decline any further, and would only firm up in the future. Vodafone Essar managing director Asim Ghosh and his counterpart at Idea Cellular, Sanjeev Aga, are of roughly the same view; that it is unrealistic to expect any further reductions, as below-cost packages are gradually realigned.

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MRTPC suspects Airtel-Vodafone cartel, orders probe into tariff hikes