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Relevant Market: An Important Factor in Determining Abuse. Competition Act, 2002

Individual sellers compete to obtain the favour of purchasers in order to improve their revenues or market share. The Monopolies and Restrictive Trade Practices Act, 1969 was replaced by the Competition Act, 2002, which was adopted by the Indian Parliament. It is now in force in India to manage competition law.

The Competition Act, 2002 ("Act") was changed twice after its enactment: the Competition (Amendment) Act, 2007 and the Competition (Amendment) Act, 2009.

The structure it provides for the formation of the Competition Commission, as well as the powers it gives to prohibit anti-competitive acts and foster good competition in the Indian market, are two of the primary elements of the Competition Act, 2002.

What is Relevant Market?

The setting in which such economically detrimental behaviour might occur is described in the definition of the relevant market. As a result, the process of defining a market and a relevant market is of the first moment, implying that any judgement of a market player's behaviour can only come after, not before, the definition.

The method starts by presuming that there is some anti-competitive behaviour in the market. It then proceeds to identify the bounds of the smallest market in which such behaviour might be sustained through a series of questions. Following the definition and drawing of the smallest market's contours, the actual behaviour in question is examined to see if it has or might have an anticompetitive effect.

The purpose of this brief article is to define the relevant market, relevant product market, relevant geography market, and the analytical approach used by competition authorities to determine relevant markets.

What is Abuse of Dominant Position?

Section 4 of the Competition Act prohibits the misuse of a dominating position. The second section of the same Section defines abuse of dominating position. According to the legislation, a dominating position in the Indian market refers to any company that has the position and authority to:
  • Operate independently of the relevant market's competitive pressures;
  • Influence its rivals, consumers, or the relevant market in its favour.

Predatory pricing, for example, is regarded as a form of abuse of the dominating position. Simply put, it is regarded an abuse of the dominant position when a dominating firm participates in AAEC actions.

The distinction between anti-competitive agreements and abuse of dominant position is that anti-competitive agreements need two or more parties and can be between any company or firm; abuse of dominant position does not require the involvement of a dominant firm. A single party can misuse a dominating position, but the party must be in a dominant position in the relevant market.

Factors to determine the dominant position

Dominance has traditionally been defined in terms of the enterprise's or group's share of the market. In any event, a number of factors come into play when determining the market effect of a project or a collection of projects.

These are some of them:
  1. a market shares.
  2. the size and assets of the undertaking.
  3. size and significance of contenders or competitors.
  4. the financial intensity of the undertaking.
  5. a vertical combination or integration.
  6. a reliance on customers on the undertaking or undertaking.
  7. degree of section and exit barriers in the market.
  8. countervailing purchasing power.
  9. market structure and size of the market.
  10. a source of dominant position viz. regardless of whether it was earned by a resolution or a legislation, etc.
  11. Social costs and commitments, as well as major business's commitment to financial betterment as a result of the current circumstances.
The Indian Competition Commission is also authorised to take into account any other variables that it deems relevant for ensuring dominance.

Relevant Market

The relevant market' in which the accused party has a dominating position is the first item to be resolved in a long case of alleged abuse of dominant position. The purpose of displaying a relevant market is to represent the extent to which an endeavour circumstance may be tested for strength and abuse. In other words, the relevant market recognises the specific item/administration or class of things made or benefits supplied by an enterprise(s) in a specified geographic zone.

Relevant Market Product

A market comprises all those products or services that are interchangeable or are substituted by the consumer.

Factors determining the relevant product market are:
  • Physical characteristics or end-use of goods.
  • Price of goods or services.
  • Consumer preference
  • Exclusion of in-house producers.
  • Existence of specialized producers.
  • Classification of Industrial products.

In the case of Atos Worldline v. Verifoneindia, 2012[1] the Competition Commission of India (CCI), held that the relevant product market is to be looked at from both demand and supply perspective based on the characteristics of the product, its price and intended use.

Similarly, in the case of "Surinder Singh Barmi v The Board of Control for Cricket in India (BCCI), Case No. 61/2010"[2], it was held that the relevant market was settled on the thought of demand substitutability of different types of amusement or entertainment. It was decided that a cricket match could not be replaced by another game based on neither the attributes nor the purpose of the person viewing the cricket match.

Relevant Geographic Market

A market is defined as a geographic region in which the circumstances of competition for the supply or demand of products or services are noticeably homogenous and distinct from those in nearby areas.

Factors determining the relevant geographic market:
  1. Regulatory trade barriers.
  2. Local specialization requirements.
  3. National procurement policies.
  4. Adequate distribution facilities.
  5. Transport cost.
  6. Language.
  7. Consumer preference.
Need for secure or regular supplies or rapid after-sales service.
In the case of Bijaya Poddar v. Coal India Ltd, 2013[3] it was held that these are territories or areas where demand and supply of products of administrations can be said to be homogenous and discernable from markets in neighboring regions.

Similarly, in the case of Atos Worldline v. Verifoneindia, 2012[4] it was held that naturally, a few factors at that point, as regulatory trade barriers, local detail necessities, national acquirement approaches, satisfactory conveyance offices, transport costs go under the domain of thought. Consequently, if every such factor were uniform all through the nation versus an item, the entire nation would be the relevant geological region.

End-Notes:
  1. Atos Worldline v. Verifoneindia, Case No. 56 of 2012
  2. Surinder Singh Barmi v The Board of Control for Cricket in India (BCCI), Case No. 61/2010
  3. Bijaya Poddar v. Coal India Ltd, Case No.59 of 2013
  4. Atos Worldline v. Verifoneindia, Case No. 56 of 2012

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