Abuse of a dominant position occurs when a dominant firm in a market, or a
dominant group of firms, engages in conduct that is intended to eliminate or
discipline a competitor or to deter future entry by new competitors, with the
result that competition is prevented or lessened substantially.
An enterprise in dominant position performs any of the following acts: directly
or indirectly, imposes unfair or discriminatory practices, limits or restricts
production of goods or provision of any services in any form.
The Indian position regarding dominance is currently governed by the Competition
Act, 2002, which deal with the matter in detail. But before going into that it
will be worthwhile to take a look at the position under the old law, which is
The Monopolies and Restrictive Trade Practices (MRTP) Act, 1969.
The provisions of this Act were targeted at “dominant undertakings” and as a
result firms were being hit merely due to their size. The term “dominant
” was defined under Section 2(d).
The Act defines dominant position (dominance) in terms of a position of strength
enjoyed by an enterprise, in the relevant market in India, which enables it to:
- a operate independently of the competitive forces prevailing in the
relevant market; or
- affect its competitors or consumers or the relevant market in its
It means that the fact or state of being dominant: such as. a sociology :
controlling, prevailing, or powerful position especially in a social hierarchy
male dominance political dominance companies competing for dominance in the
market dominance over their rivals. The term abuse of dominant position refers
to anticompetitive business practices in which a dominant firm may engage in
order to maintain or increase its position in the market.
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; etc.
- As per Section 4(2)(c) of Act of the Act, there shall be an abuse of
dominant position if any enterprise indulges in a practice resulting in
denial of market access in any manner.
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.
Factors To Determine Dominant Position
Dominance has been traditionally defined in terms of market share of the
enterprise or group of enterprises concerned. However, a number of other factors
play a role in determining the influence of an enterprise or a group of
enterprises in the market. These include:
- market share,
- the size and resources of the enterprise;
- size and importance of competitors;
- economic power of the enterprise;
- vertical integration;
- dependence of consumers on the enterprise;
- extent of entry and exit barriers in the market; countervailing buying
- market structure and size of the market;
- source of dominant position viz. whether obtained due to statute etc.;
- social costs and obligations and contribution of enterprise enjoying
dominant position to economic development.
The Commission is also authorized to take into account any other factor which it
may consider relevant for the determination of dominance.
As to the requirement to show anticompetitive effects, in some older cases, the
CCI has considered and applied an object-based approach while finding abuse (for
example, National Stock Exchange case).
In more recent cases, however, the CCI and COMPAT have deployed an effects-based
approach while evaluating abusive conduct. The following cases are illustrative.
- In the Schott Glass case the COMPAT found that unlawful price discrimination
required a showing of both(i) dissimilar treatment to equivalent transactions;
and (ii) harm to competition or likely harm to competition in the sense that the
buyers suffer a competitive disadvantage against each other leading to
competitive injury in the downstream market’. The matter is under appeal before
the Supreme Court.
- In XYZ v REC Power Distribution Company Ltd, the CCI noted that
establishing a denial of access meant proving ‘anticompetitive
effect/distortion in the market in which denial has taken place
Every car owner would give a knowing nod when spoken to about the struggle of
finding reasonably priced spare parts for their cars. While original parts can
only be found at limited dealerships (which would invariably be miles away from
home), once found, a small block of plastic would be worth a proverbial fortune.
In this post, the issue of ‘abuse of dominant’ position as per S.4 of the
Competition Act (‘the Act’) shall be analyzed. The three steps to determine a
contravention of S.4 shall be discussed in terms of factors considered by the
Commission to assess each, and lastly, penalising powers of the Commission will
be looked into.
- Relevant Market:
- Product Market;
- Geographical Market
- Determination of dominant position
According to the Act, dominant position means a position of strength, enjoyed by
an enterprise in the relevant market in India which enables it to:
- Operate independently of competitive forces in relevant market
- Affect competitors, consumers or relevant market in its favour
Section 19(4) of the Act sets out various factors that the Competition
Commission of India (the CCI) must consider in assessing whether an enterprise
enjoys a dominant position, such as market share, size of the enterprise,
resources available to it, importance of competitors, economic power, commercial
advantages, vertical integration, consumer dependence, entry barriers, market
structure and size.
Section 4 of the (Indian) Competition Act 2002 (the Act) prohibits enterprises
holding a dominant position in a relevant market from abusing such a position.
It prevents any enterprise or group from abusing its dominant position. The Act
also provides circumstances under which there is abuse of dominant
position. Section 4(2) of Act prevents following acts resulting in abuse of
- Impose unfair or discriminatory condition or price in sale and purchase
of goods or services;
- Limit or restrict;
- Production of goods or services
- Technical or scientific development relating to goods or services to the
prejudice of consumers;
In Dhanraj Pillay & Ors v Hockey India
,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.
Faridabad Industries Association (FIA) v M/s Adani Gas Limited (AGL)
 (2014) (Adani Gas case), the CCI held by the court that a restriction was
imposed by a dominant enterprise which may not be abusive if it is subject to
the same restriction by a third party.
In summary, the more recent CCI and COMPAT jurisprudence reflects a move away
from rigid form-based analysis. Instead, the CCI is increasingly requiring proof
of anticompetitive effects in its enforcement action.
The Competition Act, 2003 is the successor of the Monopolistic and Restrictive
Trade Practices Act, 1969. It went to great changes in 2007. Thus, In India has
ages barely seven years on the prevalent competition law jurisprudence. In spite
of that, it is a progressive bit of legislation which, unlike the MRTP Act which
had little tolerance for any dominance, recognizes the changing market
conditions and does not have problems with dominance per se, but it does not
veer away from its objective of keeping the market competitive.
The preamble to and section 18 of the Act suggests that the purpose of the Act
includes ensuring fair competition in India. The standard is largely economic,
with a view to preventing practices that have an appreciable adverse effect on
competition, promoting and sustaining competition in markets, and protecting the
interests of consumers.
The Act does not provide for sector-specific regulation of dominance. Under the
Act, the CCI has powers under which it can investigate unilateral conduct by
dominant enterprises across all sectors.
- sub section (4) of Section 19
- Case no. 73 of 2011, in 2015
- Case no.71 of 2012 In re 2014
- Case no.71 of 2012 In re 2014