Competition Law – Abuse of Dominant Position

The primary objective of competition law is to maintain market competition by regulating anti-competitive strategies used by companies to disrupt the market. This is not only ensures fair competition but also the availability of a variety of options at the disposal of the consumers to choose from. Competition law is governed by the Competition Act,2002 and regulated and maintained by the Competition Commission of India.

There are various ways in which companies use anti-competitive agreements in order to gain profits in and on unfair manner. They are as follows-

  • Cartelization
  • Horizontal Agreements
  • Vertical Agreements
  • Abuse of Dominant position

In this article, we shall see the abuse of dominant position in detail.

DOMINANT POSITION ( Section 4 Competition Act, 2002)

Dominant Position has been defined as a position enjoyed by an enterprise whereby 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.

ABUSE OF DOMINANT POSITION (under Section 4 Competition Act, 2002)

An enterprise in dominant position performs any of the following acts:

  1. directly or indirectly, imposes unfair or discriminatory practices.
  2. limits or restricts production of goods or provision of any services in any form.
  3. indulges in practice or practices resulting in denial of market access.
  4. makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which have no connection with the subject of such contracts; or
  5. uses its dominant position in one relevant market to enter into, or protect, other relevant market.

There are three stages for determining whether an enterprise has abused its dominant position-

i) Define the relevant market.

ii) To determine whether the company/firm/enterprise concerned is in a dominant position in the relevant market.

iii) To determine whether the conduct of the company in a dominant position has led to the abuse of its dominant position.

The companies that abuse their dominant position a lot of use predatory pricing techniques.

Let us understand this with the help of cases in India and Internationally.

1. Reliance Jio

In 2017, Bharti Airtel had filed a complaint against Reliance Jio with the competition commission of India accusing it of abusing its dominant position by way of predatory pricing. Airtel which was the top market player with the maximum market share before Reliance Jio came about and its net profit dropped by 54% from 2016 to 2017. Reliance Jio had started with a price point of zero which was absolutely below the cost and had garnered over 72 million subscribers overtaking Airtel and becoming the top market player.

Read – Tribunalisation And Its Impact On The Apex Court

The question here was whether Reliance Jio’s Zero Pricing amounted to predatory pricing and further to Abuse of Dominant position.

CCI had rejected the complaint of Airtel stating that in order for a company to abuse its dominant position it must already have a dominant position, which Reliance Jio lacked in this case as it was a new entrant in the market and a new entrant cannot have a Dominant position in the market and hence cannot be accused of predatory pricing.

2.  NSE v. MCX

MCX challenged the conduct of NSE4 predatory pricing. According to NSE its low pricing strategy was merely An introductory price in the CD segment market which was viewed by MCX as an abuse of dominant position by NSE. CCI held that, since August 2008, due to its position of strength, NSE resorted to zero pricing.

MCX-SX did not have such strength. NSE did not have any justifiable reason to continue offering its services for such a long time free of cost. On the other hand MCX-SX did not have any other source of income as it operated only in the CD segment market. Thus, CCI declared the zero pricing policy of NSE as unfair.

3. Microsoft EU case

Sun Microsystems US-based company had filed a complaint against Microsoft when the latter refused to provide interface information which was necessary for Sun Microsystems in order to develop a product compatible with Windows PCs. The EC started an investigation against Microsoft for its tying of Windows media player with Windows 2000 PC operating system. The EC held that Microsoft had abused its dominant position in the PCOS market to strengthen the position of its Windows Media Player in the Media player market, a market in which Microsoft faced competition. Microsoft did not provide choice to consumers to obtain Windows OS without the Windows Media Player.

The European Commission observed that the abuse by Microsoft was hindering innovation in the media player market which led to consumers having very limited choice.

4. Google

Consim Info Pvt Ltd. and Consumer Unity & Trust Society Filed an information with the CCI which was followed by an investigation for the alleged abuse of dominant position by Google. Allegedly Google created an uneven playing field where it favoured its own services which strengthened its position in various search markets to enhance its position in additional markets. Google was accused of running its core business of search and advertising in a biased manner which caused harm to the consumers as well as the advertisers where it favoured its own services and partners through manually manipulating the results to the advantage of its vertical partners. This results in the other websites being moved down in the search results which caused less traffic. This was allegedly done by Google by mixing its vertical results from vertical search services such as Google Maps, Google News, YouTube etc into its organic results.

In 2018, CCI slapped Google with a fine of Rs.135.86 crore which is not even one 10th of the $2.7 billion fine by the European Commission on google for the same reasons. The Director-General had found many violations against Google however, to members of CCI give a dissent order stating that no evidence of abuse of dominance was found against Google.

On the following counts, Google has been found to have abused its dominant position by CCI-

1. Commercial flights

2. Negotiated search intermediate agreements

3. Universal Results

From the following cases we can conclude that The competition commission of India must play a much stronger role as the regulator of competition in India. There is a lot of scope for growth of competition law in India So that it reaches as par with the antitrust regulators of the world.

This Article is written by Pratima Sharma, student of B.Com LL.B at Amity Law School

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