The Competition Act, 2002 focuses to sustain competition, protect the
interests of the consumers and ensure freedom of trade in markets in India. It
enables a healthy competitive culture that inspires the business to be fair,
competitive and innovative. This enhances consumer welfare and supports economic
(under Section 4 Competition Act, 2002)
Dominant Position has been defined as a position enjoyed by an enterprise
whereby enables it to:
- operate independently of competitive forces prevailing in the relevant
- affect its competitors or consumers or the relevant market in its
i.e. according to the act:
Section 4(2) of the Act provides that there shall be an abuse of a dominant
position if an enterprise or a group:
- directly or indirectly imposes unfair or discriminatory conditions or prices in
the purchase or sale of goods or services;
- restricts or limits production of goods or services in the market;
- restricts or limits technical or scientific development relating to goods or
services to the prejudice of consumers;
- indulges in practices resulting in a denial of market access;
- makes the conclusion of contracts subject to acceptance by other parties of
supplementary obligations, which, by their nature or according to commercial
usage, have no connection with the subject of such contracts; or
- uses its dominance in one market to enter into or protect its position in other
relevant markets (i.e, leveraging).
In Dhanraj Pillay & Ors v Hockey India
(2013), the CCI balanced anti competitive
effects against the defendant’s justifications. The CCI held that the Act was
not violated where allegedly abusive contractual restrictions were not
disproportionate to a sporting organisation’s legitimate regulatory goals.
In the case of, Shri Neeraj Malhotra, Advocates v. North Delhi Power Ltd.,
the CCI observed that Section 4 of the Competition Act does not prohibit an
enterprise from holding a dominant position in a market, it does place a special
responsibility on such enterprises, in requiring them not to abuse their
dominant position. The CCI further held that Section 4 does not contain an
exhaustive list of activities that would amount to contravention of its
provisions. The actions, practices and conduct of an enterprise in a dominant
position have to be examined in view of the facts and circumstances of each
Through a catena of cases, the Competition Commission of India has identified as
to what constitutes abuse of dominant position to fall under the purview of
Zero pricing by a dominant player amounts to annihilating or destructive pricing
being beyond the parameters of promotional or penetrative pricing.
By providing 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.
In a competitive market scenario, where big players are already operating in the
market, it would not be anti competitive for an entrant to incentive customers
by giving attractive offers and schemes.
Providing services below the average variable cost unless it coupled with abuse
of dominant position does not amount to predatory pricing in contravention to
the Competition Act (Section 4).
Market share is one of the indicators for assessing dominance, but the
same cannot be seen in isolation to give a conclusive finding.
No restriction affecting the entry or expansion of other entrants into the
market in indicative of lack of abuse of dominant position.
The narrow interpretation of the concept of dominance would mean that
an entrant armed with a new idea, a superior product or technological
solution that challenges the status quo in a market and shifts a large consumer
base in its favor would have to be erroneously held dominant.
The interpretation of the Competition Act, 2002, does not allow more than one
What is relevant market?
‘Relevant market’ is one of the primary concerns while determining dominant
position as well as abuse of dominant position by an enterprise.
Section 2(r) of the Competition Act renders an exclusive definition for the term
‘relevant market’. It states that it means the market which may be determined by
the Commission with reference to the relevant product market or the relevant
geographic market or with reference to both markets.
Relevant product market is defined as a market comprising all those products or
services which are regarded as interchangeable or sustainable by the consumer,
by reason of characteristics of the products or services, their prices and
Relevant geographic market refers to a market comprising the area in which the
conditions of competition for supply of goods or provision of services or demand
of goods or services are distinctly homogenous and can be distinguished from the
conditions prevailing in the neighboring areas.
On account of sound economic positions, the enterprises may exercise such
dominant position to restrict competition preventing other entities to evolve
and carve out their place in the market. The Competition Act, 2002 monitors such
unfair trade practices preventing sound market approach.