Authors

Sourojit Mukherjee

Student School of Law KIIT

Ayaskanta Ghosh

Student, School of Law KIIT

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Abuse of Dominant Position

Abuse of Dominant Position- Competition Law, IJCLP Blog

Abstract

Market diversity strengthens flow of economy: A fair competition provides equal opportunity to every player and due to this tight competition each company comes up with more and more quality goods and consumers from all strata invest money as per their demands. In this way the flow of economy and the circle of demand and supply remains active. To ensure this fair competition, the enterprises having a dominant position must be kept in check so as to the get no opportunity to abuse their position in market and ultimately harm the economy. This article is going to discuss important aspects of abuse of dominant position.

Introduction

India is a growing economy, keeping in view of the growing economy the Parliament enacted the Competition Act, 2002. The main intention behind the act was to elevate and sustain healthy competition in the market and to discourage any adverse action against such competition. It is also a step taken to ensure freedom of trade, a fundamental right guaranteed by our constitution.

A perfectly competitive market provides Lower Consumer Price and channelizes economy to the grass root, in fair competition since the organizations and companies need to take part in a neck-to-neck competition with other players, the organizations attempt to offer a striking discount on the fixed costs to draw attention of maximum clients. And in this compulsion of the situation players have no scope to compromise with the quality of the goods which provides better market outcomes.

Section 4 of the Competition Act, 2002

According to Section 4, If a company or enterprise or a group in “dominant position” functions any of the following acts (mentioned hereunder), is taking undue advantages or abusing its position in the market.

  1. Direct or indirect imposition of unreasonable price[1]
  2. Limitation or restriction imposed on manufacture of goods or provision of any facilities in any form[2]
  3. Any practice which results in suppression of market access[3]
  4. Conclude contracts and agreements subject to acceptance by third parties of additional obligations which is not connected with the subject matter of such contracts;[4] or
  5. Arbitrarily uses its dominance in a “relevant market” to enter into, or preserve other markets which are relevant.[5]

Therefore, the above mentioned acts shall be avoided to ensure fair competition, as clearly the acts poses threat to the smooth functioning of a market.

It is thus important to understand what is meant by “Dominant Position”

Dominant Position

Dominant Position according to Sec 4 of Competition Act

The Competition Act, 2002 States-

“For the purposes of this section, the expression–

(a) dominant position means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to–

(i) operate independently of competitive forces prevailing in the relevant market; or

(ii) affect its competitors or consumers or the relevant market in its favour;”[6]

Therefore, there are, primarily, three stages to hold a company or any business group is abusing its dominance in market: –

  1. Defining what the “relevant market” is in that case.;
  2. Second Stage involves proving the “enterprise or the group” is having a dominant position in the ‘relevant market’[7]
  3. Lastly, it must be proved, that, the impugned act is an ‘abuse of the position of dominance’ the company or the group is holding on the ‘relevant market’.

Judicial decisions on Dominant position

In the recent case of Maharashtra State Power Generation Co. v. Coal India Limited. & Others[8] Competition Commission of India (CCI) pointed out that Coal India Ltd and its subsidiaries arbitrarily controls market forces and holds dominant position in relevant market of coal. CCI also found that Coal India Ltd. Was imposing unjust terms and conditions in the market of non-coking coal through its subsidiaries.

Measuring the situation, the commission found Coal India guilty for abusing of its “dominant position” mentioned under section 4 of the Competition Act and imposed a fine of Rs.1773.05 crore on Coal India.

In the case of National Stock Exchange v. UPSE[9] the issue was raised before court that several fee waivers and lower deposit demands respect to only with the Currency Derivative section of National Stock Exchange were completely different from other sections to eliminate eligible competitors.

Competition Commission of India held that the act by the National Stock Exchange is a clear breach of the provisions of the Competition Act and amounts to the abuse of power of its dominant position.

In the case of Bharti Airtel v. Reliance Jio[10] the allegation raised before court by Airtel that Reliance Industries Limited and Reliance Jio is practicing predatory pricing in the relevant market of 4G LTE Telecom Services by using the power of dominant position.

Jio submitted the last Annual Report of Bharti Airtel before Competition Commission of India which does not separate telecom services utilizing different technologies so the commission has found that “relevant market” in this present case is the market which is providing cordless telecom facilities.

It was further found by commission that aggregate investment of Airtel in telecom sector is more than the amount Jio has invested.

According to the information of TRAI market share in telecom sector of Airtel is 23.5% followed by Vodafone (18.1%), Idea (16.9%), BSNL (8.6%), Aircel (8%), RCOM (7.6%) and Jio (6.4%). So it cannot be said that Jio is holding the dominant position.

While giving the judgement commission analysed these issues carefully and held offers and policies of Jio are promotion in nature rather being predatory and rejected the plea of Airtel.

In the recent case of Fast Track Call Cab Pvt. Ltd. v ANI Technologies Pvt. Ltd,[11] the informers alleged that the respondents (ola cab) is taking undue advantages of their dominance in the “relevant market” by giving huge discounts. The commission observed that having more numbers of taxi aggregators does not mean the respondents were dominant in the “relevant market”. The Court has expressly denied categorizing an entity as “Dominant Entity” merely because of the same occupies a unique concept or advanced technological solution. This is one of the most important merit of a fairly competitive market, competition appreciates technological advancements and revolutionary ideas.

Views

In a large market like India where different companies come up with different strategies to measure the pulse of consumers to make themselves more acceptable in market. Each company takes part in this competition with the same intention to garb maximum space in market beating others. Naturally, the fittest player survives and emerges as a larger and successful company. After reaching in a remarkable position generally, the company will not want to lose the position or the occupied market. So, they will try to influence institutions, policy makers to eliminate nearest competitors and to hold a position of dominance in market, which could result into total collapse of the system. De-concentration of wealth is the primary nature of a healthy economy. If a company captures the market manages to concentrate the wealth of the market, there will be a tilt in the economic structure of market. Which will surely affect the dynamic nature of the market and will discourage new players to take part in competition as well.

The Competition Act entrusts the responsibility of investigation on CCI. This is very useful, as the economic environment is very dynamic and thus, the facts of every case is different and to justify the object of the Competition Act the judiciary had and will have to go beyond the black letter laws.

Conclusion

Competition commission of India and the courts in different situation thus decided what is a “dominant position”. This fact based decisions not only upheld freedom to carryout trade and business without any intervention of any dominant enterprise and also does not let any enterprise take undue advantage of such provision.

Continuous betterment in innovation and technology sectors, In the era of digitalization, companies avail more innovative technologies to make themselves more attractive and productive in fair market competition so that they can supply more quality goods in cheaper price and due to this lower price companies can grab micro level economy and can enrich this as well.


[1] The Competition Act, 2002, § 4(2)(a), No. 12, Acts of Parliament, 2003 (India).

[2] The Competition Act, 2002, § 4(2)(b), No. 12, Acts of Parliament, 2003 (India).

[3] The Competition Act, 2002, § 4(2)(c), No. 12, Acts of Parliament, 2003 (India).

[4] The Competition Act, 2002, § 4(2)(d), No. 12, Acts of Parliament, 2003 (India).

[5] The Competition Act, 2002, § 4(2)(e), No. 12, Acts of Parliament, 2003 (India).

[6] The Competition Act, 2002, § 4, No. 12, Acts of Parliament, 2003 (India).

[7] Ansul Industries v. Shiva Tobacco Co., 2007 SCC OnLine Del 74.

[8] Maharashtra State Power Generation Co. v. Coal India Ltd. & Others, Case Nos. 03, 11 & 59 of 2012.

[9] National Stock Exchange v. UPSE, Case No. 67 of 2012.

[10] Bharti Airtel v. Reliance Jio, Case No. 03 of 2017.

[11] Fast Track Call Cab Pvt. Ltd. v ANI Technologies Pvt. Ltd, 6 & 74 of 2015.