Bharti had filed its complaint with the Competition Commission of India (CCI) saying Jio, backed by billionaire Mukesh Ambani, had engaged in "predatory pricing" after entering the market with temporary offers of free voice and data, with certain caps.
CCI said Jio's offers did not amount to anti-competitive behaviour given the telecom provider was a new entrant and hence did not have a dominant position in India, nor was it preventing others from offering similar services.
"Free services cannot by itself raise competition concerns unless the same is offered by a dominant enterprise and shown to be tainted with an anti-competitive objective of excluding competition/competitors," CCI said in an order published on its website.
Bharti Airtel declined to comment on the CCI order.
Jio's entry has pushed rivals such as Bharti, the India unit of Vodafone Group Plc and Idea Cellular to lower prices, resulting in a decline in their profits.
Jio, which had signed up 72 million paying customers under its Prime plan by the end of March, has cut down on free services since April as it shifts towards securing more profits.
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