Abuse of Dominant Position
The Competition Act, 2002 was introduced repealing the earlier
legislation Monopolies and Restrictive Trade Practices (MRTP) Act,
1969, wherein under the Competition Act, 2002 a new authority was
established as Competition Commission of India to administer the
compliances in relation to competition in India.
Abuse of Dominant Position “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
prevailing in the relevant market; or affect its competitors or consumers
or the relevant market in its favour In general sense the word dominant
position refers to a situation wherein the enterprise is in a position to
dominate the market independently and also affects its competitors.
Abuse of dominant position is a condition wherein an enterprise or a
group of enterprises uses its position in the market in an exclusive
manner. The Competition Act, 2002 provides a list of relevant practices
that will eventually comprise abuse of a dominant position and, such
circumstances are disallowed. The Act also states that having dominant
position is not bad but the abuse of such dominant position is
considered as bad or against the law and competition.
Wherein section 4 states as follows: “No enterprise or group shall
abuse its dominant position. There shall be an abuse of dominant
if an enterprise or a group
(a) directly or indirectly, imposes unfair or discriminatory—
(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price) of goods or
service
b) limits or restricts—
(i) production of goods or provision of services or market therefor; or
(ii) technical or scienti c development relating to goods or services to
the prejudice of consumers; or
(c) indulges in practice or practices resulting in denial of market access;
or
(d) makes 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
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(e) uses its dominant position in one relevant market to enter into, or
protect, other relevant market.”
Factors Determining dominant position—According to section 19 of
the Competition Act, 2002, the following factors shall be kept in mind by
the CCI while determining dominant position of an enterprise:
1. enterprise’s market share;
2. resources and size of the enterprise;
3. importance and size of the competitors;
4. economic power of the undertaking including commercial advantages
over competitors;
5. Consumer dependence on enterprise;
6. dominant position or monopoly whether acquired as by any statute or
being a Government company or a PSU or otherwise;
7. entry barriers including barriers such as regulatory barriers, nancial
risk, high capital cost of entry, marketing entry barriers, technical entry
barriers, economies of scale, high cost of substitutable goods or service
for consumers;
8. buying power;
9. size of market and market structure;
10. social costs and social obligations;
11. relative advantage, by the enterprise enjoying a dominant position
having or likely to have an appreciable adverse effect on competition, by
way of the contribution to the economic development;
12. any other factor considered relevant for the inquiry by CCI.
Relevant decided case laws for Dominant position
Uber India Systems Private Limited v CCI (2019), the apex Court held
that the losses made by Uber India Systems Private Limited, per trip
were prima facie indicative of abuse by way predatory pricing as well as
of dominance itself.
In ESYS Information Technologies Pvt Ltd v Intel Corporation &
Ors (2014) (Intel case), the Competition Commission of India dismissed
claims made under section 4 based on distribution agreements of Intel
in part because the intel products distributors are not precluded from
dealing in the products of its competitors and they were found dealing in
the competing products and therefore ‘there is no question for
foreclosure of market for Intel’s competitors.
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In Google LLC & Anr vs Competition Commission of India, the CCI
held that the prominent display and pre-determined of Google’s own
products in the search results was an discriminatory/unfair condition in
the provision of services. Further the Hon’ble NCLAT upholds penalty of
INR. 1,337 crore on google for abuse of dominant position in Android
Mobile Device Ecosystem. This case is currently pending with the
Hon’ble Supreme Court of India.
Consequences of Abuse of Dominant position According to section
of the Competition Act, 2002, the CCI, after an inquiry into the abuse of
dominant position, may pass all or any of the following orders:
1. direct an association of enterprise or enterprise/undertaking having
dominant position involved in abuse of such dominant position to
discontinue such abuse;
2. impose penalty not exceeding 10% of the average of the turnover for
the last 3 preceding FY’s, upon each of such enterprises or person
which are parties to such abuse;
3. direct the undertaking or association of enterprise concerned to
abide by such orders as the CCI may comply and pass with the
directions, including payment of cost, if any.
In addition to the aforesaid orders, the CCI has the power to order
division of enterprise enjoying dominant position to ensure that it does
not abuse its dominant position in accordance to the provisions of
section 28 of the Competition Act, 2002.
According to section 46 of the Competition Act, 2002, All sums that are
realised by way of penalties under this Act shall be credited to the
Consolidated Fund of India.
