CHAPTER - V

ABUSE OF DOMINANT POSITION UNDER COMPETITION

ACT, 2002

5.1 INTRODUCTION

This Chapter addn5scs the conccpt uf dominant position us defined unda Ihe
Compctition Act, 2002 and when the cwnduct or behavior ~ndulgcdin by such firms'
amount to abuse of dominmw and principles & pamrnctcrs for evaluating the abuse of
dominance by such entitra in different jurisdictions and thc poss~blechallcngm mid
prc)blems before the Compctition Co~nmissionof India in dcaliny with the subject and
the salutary lesions that could be drawn fnbm the cornpctition regimcs of thc dcvelopcd
countries.

Almost every mcxlern cornpctition law sets out to comhat two tnuin types of
problems- anti-competitive agrennnits and ohusc of markct p)wcr by dominunt firms,
The abuse of a dominant position is anotlicr way of n~cddliriywith conipctition in thc
rnarket placc. Sirnply statcul, it refirs to the conduct of nn cnterprisc that tmjoys a
dominant position as delincntcd by thc Act. 'l'hc ('ompetition Act, 2002 prohibits tile
use of markct controlling power to prevent .tndivitlual cnt~rprisesfrom pushing out
competing tinns from the rnarket as well a fi-om dictating priccs.'

Abuse of dominance provisions typicully cnvisuyes thrcc wmmnn clemcnta.

First, it is imperative to establish the cxistcnce ol'a dominant position held by a firm or
group of firms in a market. This in turn invuriahly dcmurids the delineation of thc
relevant market in which such power or position is exmciscul. Sccand, it ir ncwaary to
identity specific practiceslat are bancful to compelition. Third, their ovcrall cKccta in
the relevant marktl havc to be assessed. Thus, the u~nceptof ahuw of dnminant
position or markc! powcr cnvisagcs the rosorl to Anti-cc~mpclitivcbusiness practicev2

' Ihe pm+r\tonupnlatnlng lo ahuw ofdomtnance are deal1 udn scc~u*u4, 19, 26,27. 32 Xr 34 ofthe
Compal~~cm Act. 200:
! Abuw of domtnancr by a dtnn~nantfirm will ccrtatnly rmull tn uupprermtng. pcntlng or dtstcmtng of
competttmn H a . 11s eflccl s always anl~.compet~lrvcIn nature I-inwcvn, lhc rumcl~veIra&
practlecs defined under S 3 on thr mlt of agrrcmentr bctwccn firm but lbur of dmtnnncc may
110
by a dominant firm or a group in order to maintain or increare its position in the
market. Pure competition is a market mndition in which neither the buyer nor the
seller, as the case many be, has m m l over the market. 7htrcfore, in such a marltot
condition the price is determined by the bargaining of JNI appreciable n u m k of buyas
& sellers and both the plnyers of the market acting independently of the other, In such a
condition, none of them dominates the marltet and has nlonopoly power or cunlrol over
the price. In order to achieve this avowed objective, the Competition Act provides that
no enterprise or p u p shall abuse its dominant The e~itcrprist,or gmup is in a
dominant position and that it abuscs the dominant position? Thus, the Compqitio~lAct,
2002 prohibits acts or bchaviour involving ahuse of dominant position of market power
but not mcrc dominance. Therefijre, the Act doesn't prevent a firm fi.C~rnnquiring
dominance by legitimate means but abusc of dorninnnce is ceiiainly F i w n d u p n by
it. Thus, one of the objectives of the Competition Act, 2002. is to regulate the conduct
of the dominant cntcrprise (11 a goup which weakens competition und stralgthcns
dominant position. Section 4 only prohibits the conduct which cxploils a dominant
position but not an cntcrpribc or group holding a dominanl p,sition.

The Competition Act, 2002, prnh~hitsacts or bchaviour involvirig an abuse of

dominant p)sition of markct power by i ~ t icntcrprise cs guup enjoyi~lgposition to
control relevant market and such acts or bcliuviour havc the cft'ccts of limiting acccva to
a relevant market or oth~wiscunduly restrain competition, which havc or likely lo
have advtrse effwt on lrade or wonornlc development.' The Act clearly dclinrutcs the
factors that are to bc w n s i d ~ r ~hyd the compct~tionauthentic! in dctcrnirning whcthcr
an ~ntcrpriseenjoys a dominant position" as well a the method for ascc-aininy the
relevant product and geographic markcts be found.' 'Illis chnptcr nddr~?rlieswhat
co~ditutesdominmce and how to ddcrminc dominance in t a n s of markd."

anw ewn wrthou~any \ U L ~agrcemcnl A h u ~ condull e utulcr 't 4 moy rcrult rr a rornpc~~~or lcaving
or prekcntrng a p>tcnt~al ~ompctrtorfrom cnt~mnythe market
' Suhs by CompctrttonlArnendmml) Act. 2007 Itn "No cnlcrpnvc rhrll ahuw ttn dominml pmtt~on"
' 'tectron 4(?) prntrdn there %hallhe an a b w of d o m r ~ np%trron
l if an cnlctprtw or a grcntp
a ) Drmtly or tndrrr~tly,rrnpowcm urifa~ror diwrrmrnattry
I) Conditron In purchase 1s MIC of'gnoda or ucrvrc, or
11) Pnce In purchavc or a l e (includrng prcdalc~yprrce) of g r ~ d nfir r r v r ~ c
' I htd
% 19(4) of thc Compct~tronAct, 2 0 2
' S 19 ( 6 )& (7) ofthe Campclrlinn Act. ?MI!
a The C~nprtr~ron Cmmteitm nf lndm ~ h t l ernquinq cvhrthcr en cntnpnne cnjoyl e domrlrent
postton or nor muvt havc q a r d 10 all or any of the fecrtm numerates tn S 19 (4) of the ACI
111
53 MEANING OF DOMINANT P O S ~ I O N

An enterprise or group is prohibited h m abusing its dominartt position. The

provision fin1supposes that on enterprise or p u p enjoys o dominant position in thc
market and then prohibits such enterprise or p u p h m ubusing it to its advantage.
Thus, dominant position" and "abuse of domiaant position" arc two mandatory
statutory ~ u i r e m r n t sthat nre to bc established bcfore condemning a firm fijr abusing
its dominance. Dominance itself is not pmhibitexlg but what is lcg~llyossclilabie is its
"abuse". A dominant position has been dcfinod in thc ('ompctition Act. 2002 in tcrms
of tl~eposition of strength enjoycd by nn sntcrprisc or group in the rcvmlant ~nnrkctin
India, which enables 11 to:

r Opcratc i~idcpcndentlyof'a)mpctitivc forces pwvuiliog in the rclcvant market,

or
Afi'cct its competitors or consumers or the rclevont ~narkctrn its

Tie lexicon meaning of tho word "L)ominmt" is 'ovcrridiny', or 'inllucntial'.

Domination in common parlance mcans markcl powcr. Markct Power is the poww to
cocrcc buyers, to do some~hingthat ho would no! do in a competitive murka. A
dominant position refers to a situation of ccononiic strength, which givc~tlic cnlcrprisc
powcr to obstruct thc rnaintcnancc ol'an cfi'cctivc compctitioa in thc markd wnccmcd
and cnahlcs it io conduc~itsell'in a way !hat it is indcpcnd~ntSrom its compclitors and
cilnsumcTs.I I

A tlominant position is a markd wntn)lliny position, cupable of driving

competing business from the market ilnd also of' dictating price. It ia a powcr of
controlling prices or unconscionably restricting compelition.

In Amcrican Tobacco Co.d a1 v. IJnitcd ~ t a t c s 'it~was opincd that the motcrial

consideration in dctcrmln~ngwhcthcr dominance ex~stsis not that prtccs arc raised and

-
U P Mtnal. Compea~mmLaw 2*d,2H)R P 256
'@Explanatton (a) to nectlrm (2) of'the Cnmpatlmn Act. 2002
" T Ramappa. (omprrrlum Law In Indu. I " rd. 2oM P 140
" 32RUS7RI
112
that competition is actually excluded but whetha there is existence of power in an
enterprise to raise prices or to exclude competition whm d d r e d to do SO.

Abuse of dominance can be indulgcsd in only by d o m i n ~ tfirms. Thus

'Dominance and' Dominant undertaking havc hem appropriately delineated in the
Competition Act, 2002 in terms af "The position of strength enjoyed by an undertaking
which enables it to operate ind~pendcntlyof competitive f o r m in Ihe rclcvnnt market
nnd also to appreciably atTwt the relevant market, competitors and wnsumm by its
actions."

Thus, the esscnce of the Competition Act. 2002 is to c u h uhusc of doniinnnce

rather than dominance itself. Hnwcvn, for dctcrmining whether thcrc is ahuse of
dominance on the pan of o husiricss ~ntity,11 is imprativc to examine whcthcr such
entity has acquired doniinilnce in the relcvnnt market. Thcrcfore, the t t m s 'doniinmcc'
and 'abusc of doainunce' have close nexus and proximity though in nsltly every
dominant firm may not abusc its pwcr. 'lhus, when dominancc is cstahlishcd then its
abusc could he allegc~.

5.3 MEANING OF "ABUSE OF DOMINANT POSITIONn

Thc mnccpl of dominance aid dotnir~utltposition has ~ p p i ~ m t undcrgonc

ly a
metamorphosis undcr the MR'ff' Act, 1960, as thcrc is no provision in thc said Act as
abuse of domina~tt'p)sitionin the rnanncr as tlclincd in the ('ompctition Ad. Ilowcva,
in the MR'fP Act, the basis ofdctemlining dominuncc was whcthcr an undrrtaking hua
a share of %th or more in the production supply, distribution or control of ymds or
' ~ the definition of dominant undcdaking urldcr thc MKTP Ad wau
s e ~ i c c s . Thus,
based on statistical ratios of sham in liccmsdl instalid cnpacity, prtxiuction, not just
of the subject undertaking but also of its int~rconncclal undaiakinp. l h e MRTP Act
was impracticable in dealing with dominant und~%akinpas it dcfind such udcrtnkiny
basing on a static arilhmdical figure and which haa hwn diapvlscd with undtr the
Competition Act, 2 ~ 2 . ' '

" txplanatron to 5 4(2) olthc Compatfm Acr. 2002

"S 2(d) of fhc MRTP Act. IPM contrrnnl fhc drfinilrtrn of dnm~nuntudmtak~ng
" S V S Raghavan C'nmm~llm opnrd that In a dynrmr chang~ngmvtmnmcnf. a nlaftc nnthmct~cat
figure ro dcfinc dom~nsnccwtll be IUI aberratlun
113
 The Competition Act, 2002 delineates h e specific tnde pradioes nsartcd to by
dominant firms amounting to abuse of dominant position.lb The ACI'? tnumaates thc
Anti-competitive practices of imposing unfair cw disaiminat~ryboding conditions or
prices or predatory prices, limiting the supply of goads or swim, or a marlrot M
technical or scientific development relating to goods or services, denial of mark&
access, imposing on other contracting purties ohl~ptionsnot related to the hasic
contract with them, and using a dominant position in one rnnrlret to gain cnhy into
another market or lo pmtect that other murkd.'"t cxenlprs such unfair or
discriminatory trading conditions or unfair or discriminatory prices nr predatory pricing
from being considcrcd as abusc of dominant position, whcn diey arc odoplcd lo t n d

It is the considcrtd opinion of the present rcscarchcr that prcvtmting ubusc of

dominance is undoubtedly one of the implwlant functions of the Competition
Commission of India.

.Ihc
. Competition Act, 2002 tacltly presumes tho1 any entcqrist: clljoying
dominant position may afTcd consumcrs and compctiton by abusing its dominnnt
pus~tion,l'hc Act also cnurnrntt~r;the typ~sof ahuses !hat may be ~ndulgcdin by an
enterprise or group mjoying dominant position thul has eithrr direct or indirect en'kct
on consumers or thc competitors.?" It is appurcnt that thc cause and 'cfY~t' of
dominance arc implicitly and intricately likcvi likc Siumae twins. l'hur. a kcy quation
111 apply~ngabusc of dvm~nanccprovisions a n s a from the fact that lhcy uddrrss
behaviors tha! are proh~hltedonly insofar us they arc adopted by a dtiminnnt firm.
Bcref of dominancc, there is no abuw, 1)ominrrnce may be abuvcd by a dominant
mteqxisc or B goup br earning unconsciunahlc and exohitunt profitx to thc detriment
of consuniers. But thc Competition Act, 2002 docm't cxplicrlly rcuqplzc it us un crbuuc
of dominance. 'lhe present researcher is of thc ccwsidircd opinion thal it is cicfinitcly s
lacuna in thc Act and needs lo hc rrddrcsstd at the carli~?it.

l6 ~ e c t ~ o
4(2)
n orthc ( ompcl~ecinAct, 2W12. along wrth Itr cxplanatron
l7 lb~d
'%baneful vadc practm anuwnun8 la abunr ofdornlnmc my be cllher cxplo~ls~~vc
or elimtnr~ive
" Explanailon lo S q2)(a) of the Compa~tw~n Act, 2(M12
-'O Sectlon 4 ofthe C'MlqKtttimr Aa. 2002
114
 Abuse of dominance position may be of two types: Exploitative and
exclusionary. Exploitative abuse refers to excessive or mbnopoly pricing where the
enterprise, not being restrained by competitive pressures, is able to charge a high price
and reap 'monopoly profits', though it is not always easy to decide what price is
excessive. Similarly, the enterprise may abuse its dominance by imposing unfair
conditions other than price.21

Most abuses of dominant position are of exclusionary nature. A dominant

enterprise may resort to tying-in, which may have the cfTcct of excluding competitors in
the tied product market since customers arc forced to buy the lied pmduct h m the
dominant enterprise. Or the dominant enterprise may rehsc to supply thc pmduct or
service to a customer; since the enterprise is dominant, this could lcave very little
choice to the customer."

The dominant position of an enterprise or u b~oupis a question of fact to hc

detemlined in each case, taking into reckoning a number of penilicnt factors, such us
the product and geographical market, its market share, the market share of the
competitors, technological advantage posscssid by the lirm, the strength of compctitars
and impediments to entry. The Competition Act, 2002 enumerutcs the factors that
ought to he taken into consideration by thc Cornpetition Conimission while holding
inquiry into the question: Whether an cnti7prise enjoys dominant position or not.23An
enterprise may acquirc a dominant position ovcr a period of timc cithc~by its ow11
efficiency in running its operations or by its supmior technological udvantitge or hy
technological superiority. Hence, the Competition Act. 2002 docs not prohibit an
enterprise or a group from acquiring dominance but abuse of dominant position is
certainly prohibikd under the Act. Thus, the Act is not prophylactic in dealing with
dominant enterprises as its concern is focuscd only on preventing dominant firms from
abusing such position in a manner prejudicial to ccmsumirs & competitors.

?' Isw, In V~nodDhall'u (cd). Cnrnpct~tion

Vlnod [>hall, 2007. Ovcrv~ew.Kcy C'nnccplr In C'ompet~l~on
Law loday, Oxford tln~vcrmlyPress, New Uclhl, p 14
" lb~d
?' Scctlon 19(4) o f the Compa~llonAct. 2002
115
5.4 DETERMINING THE DOMINANT POSITION
5.4.1 RELEVANT MARKET

Dominant position is ascdained with reference to the relevant Thus,

whenever a question arises; whether an enterprise or a p u p enjoys dominance then the
Competition Commission will have to examine the question with reference to the
relevant product or the relevant geographical market or with reference to the both. The
purpose behind the ascertaining of the ~narkctis to examine whether an enterprise is
dominant in a particular market. If an enterprise is found to be enjoying a dominant
position in a specific market comprising a yeogwphic or s product market or the both
then the next step would bc to investigate whether such an ent~xprischas indulged in
acts amounting to abusc of its dominant psition. Thus, both the conditions must have
been satisfied before arriving at the conclusion that an enterprise or u group has abusd
its dominant position.

5.4.2 RELEVANT GEOGRAPHIC MARKET

A geographic market2\s not merely the physical tcrritory in which the

competing enterprises operate not only in that part of the tcrritory whcrc tlic condition
of competition for supply of goods or provision of s~lviccsor drmand of gcu)tis or
services arc distinctly homogcnous and can be distinguishd from thc condition
prevailing in thc neighboring areas. This ilppar~ntly refers to uni formily of competition
that can be distinguishd from thc condition of competition such as terms of supply or
the mix of scrviccs ofl'crcd or detnarid~d in the neighboring arcas. G~!)graphic
dimension involves identification of the geographical arca within which wjmpctition
takes place. Relevant geographical markct could be local, aatinnal, intcrnalional or
occasionally cvcn glob81, hinging upon thc facts in cach casc.

" Sectton 2(C ) o fthe tomprtltlcln ALI.2(@2 dcllncater ntcvanl market au {he markct that may be
determ~nedby the Commlk~lonw~threlcrenrc lo the relevant product markct or w~thrcfercnce to
geograph~cmarkct or w~threference to both the market\
I' Sec 2(S) of the Compel~tlonAct. 2002 drfmew, relevant geograph~cmarket 8%a tnarkd oompnntng the
area m whlch the cond~tlonso l competltlon for supply o f gocdrr or prnvlaon of w l c e n or dcnuind of
good$ or uerv~cesare dr\tlnctty homogenous and can be dlst~ngulvhedfrom the condttang previl~llnyIn
the ne~ghbonngmarkct
116
5.43 FACTORS FOR DETERMING THE GEOGRAPHIC AND PRODUCT
MARKET

The Competition Commission may cansider all or any of the following factors
in ascertaining the relevant geographic market as well as product market.

RELEVANT GEOGRAPHIC

In determining whether an enterprise or bm~up has market powa. it is

imperative to reckon the geographical extent of the market in which it is opcnting in
order to determine as to which other undertakings it is competing with.
i Regulatory trade barriers
i Local specification requirements
i National policies
i Adequate distribution facilities
i Transport costs
i Language
i Consumer prcfcrences
h N c ~ dfor secure or regular supplies or rapid aftcr sales scrvicc2"
i Product Market :
i Market power can exists only in relation to thc supply of u particular cless of
goods or services. It i s therefore, tlecessilry to asccrtuitl the relevant product
market."
i Price of goods or services
;Consutncr prefcrcnces
i Exclusion of in- house proctuction
i Existence of spccialixcd produces
i Classificalion of industrial

'"~cction 19(6) of the Competition ACI. 2002

?' Section 2(!) defines relevant product markct mcans "A market comprtsing all tlwtx prtducts or
services which are regarded as interchartgabit or wbrt~a(ahleby the connumen. hy rcawnn of
charac~eristicsof the p r o d u c ~or xrvics, the~rprlcer and rntndcd uu;
la ~~cction
19(7) of the Competition ACI. 2002
117
 The common abuses of a dominant position are imposing discriminatory prices
or trading conditions, predatory pricing, limiting supplies, exclusive dealing, denial of
market access and other anti- competitive trade practices.

Some well known foreign decisions that explain the abuse of a dominant
position which are germnne to the Indian competition Inw are discussed hereunder.

In Campaign Masitme Belge Transports SA and othm a Commission of

European ~ounbies,'\he members of the Associated Central West Africa lincs
[CEWAL] and two other shipping conferences bmught an action before the Court.
contesting the decision of the Co~nmissionin regard to thc shipping confcrenccs. The
Commission had held that all the shipping conferences had contravend Articlc 81 (1)
EEC Treaty and the members of the CEWAL had abused thcir dominant positiqn by
intiinging the Article 82 of EEC Treaty. Further, they were hcld to have contravened
Article 81 (1) of the EEC Treaty by entering into non- competitive agreements with one
another, imposing on themselves a restraint to the effect that cach membcr, would
refrain from operating as an independcnt shipping company in the area of activity of
othcrs. It was allegcd that thcir intcntion was to share out the linear market bdwetn
northern Europe and Wcstcm Africa on a gcogaphical bascs. Thc abusc of their
collective dominant position by the mcmbcrs of CEWAL, with thc intention !f
eliminating the principal ilidepcndorit competitor, was alleged by purticipatiny in the
implementation of the co-operation agreement with Ogcfrcrn, modifying its fright ratcs
by departing from the tariff in forcc in order to nfTer rates thc same as or less lhnn thosc
of the principal independcnt compctitior for vessels sailing on Ihc same date or
neighboring dates.

In Hoffmann - La Rochc and C'o. Ag, Raslc v. C'ummission of the European

Comtnunit~es In ~mssels,"' the ('ommissron dccidcd that Roche was enjoying
dominant posttlon In respect of certaln group of vitamins on the bas~sof its market
shares, which were very exorbilant by themsclvcs. The C'ourf further cnumcratcd the

" In jo~nedca.m C - 39519hP,Judgment o f tlif I umpean coun (I.tRh chamher) 16' March, 2000: see
a1.w supra note 1 1. P 152
w ~ a 85'76.
w Supra note 11, P. 150
118
following as the pertinent factors in determining the existence of a dominant position.3'
(a) The relationship between the market sham of the undertaking concerned and of its
competitors especially those of the next largest (b) the technological leed of an
undertaking over its competitors (c) The existence of a highly developed sales network
and absence of potential competition.

General Motors Continental N V. v. Commission of the Communities.'*

The General Motors Continental NV was chargcd with intiinging Article 82 of

EEC Treaty. The infringement alleged was in the nature of charging an excessive
amount as inspection charges, pertaining to five motors vehicles monufacturcd in
another member State and imported into Belgium, towards checking for conformity
with the specifications contained in the appmv~dcertificate prescribed by the Belgium
authorities that General Motors continental NV had to carry out as the sole authorized
agent of the miinuficture in Belgium. The first issue was whether the activity involved
in the issue of certificates of confi)nnity would constitute a dominant position.

The court observcd that the holdcr of such sn exclusive right could abuse it.
"Such an abuse might lie, intcr alia, in thc imposition of a price which is excessive in
relation to the economic value of the services provided and which has the cffect of
curbing parallel imports by neutralizing the p)ssiblc more f;ivorahlc levels of prices
applying in othcr sale areas in the community, or by leading to unfair tradc in the sense
of Article 86 (2) (a)". Rut as it was shown to the Court that (jencral Motors Continental
NV had rehnded the excess charges to the parties and thacfore. the Court held that
these were no abuse.

Thus it is quite obvious that had the (ieneral Motors continental NV not
refunded the excess charges, the court would havc definitely arrival at a different
finding.

'' The court has explained the abuw of dominant pc~ail~crnas " I'he corwept of aburr of dominsncc an an
objective concept relating to the behavior of an undertaking in a dominant position which in nuch an to
influence the smcturr of a marka where, a%a result of the very pr~ienccof the unJmking in question
the degree of competition ir weakcned and which though recourse to mcthoda diffcrm~from those which
condition nonnal competition in products or arvica on lhc h a m of the lrannection of cnmmcrcial has

'
the effecl of hindenng the maintenance ofthc degree of coqxtition still existing in the ~rrarkaor the
rowh of that competition
C u 2615. Judgment ofthc moun o l I1November ,975; Supra Note II P. I W.
119
 In Federal Trade Commission v. Morton salt CO," the quality discounts
extended by Morton Salt on its premium quality Blue label and other table salts w e n
enjoyed by certain wholesalers and retailers. who competed with other wholesalers and
retailers to whom the these discounts were spumed. Morton also extended special
allowances to certain favored customers who competed with other customers to wham
they were denied.

The US Supreme Court observed that though theoretically the discounts were
equally available to all, hut hnctionnlly they were not aq the qualifying limit for
eligibility to avarl of these discounts was beyond the rcach of several purchasers and
that it was establ~shedthat Morton's quantity discounts were discriminatory. The court
further pointed out that S.2(a) of the Clayton Act, introtluccd by an amendment by the
Rob~nson- Patent Act, was intended to prevent large buycrs fiom enjoying the benefits
of quantity discounts except whcn a lower price could be justifid for specrtied reasons.

In Standard Oil Co. v. Fcdcral Trade Commission, the defense provided under
scction 2(b) of the Clayton Act, allowing a supplier to show justification for such
differentials came up for intcrprctation befbrc thc Commission. '111~Fcdeml Trcldc
Cornmission had ordered standard Oil Co., lo cease and desist iron1 selling gasoline to
four comparatively large 'Jobbers' custorncrs in Dctrr~it at a lower price that it did to
many comparatively to smaller scrvicc station customcrs in thc same urea. Standard Oil
contended that the tank- car pricc was to each Jobbcr in ortlc~to retain that johhcr as a
customer and to mcct a lawhlly qually low price ofa competitor In good faith.

However, the US Supreme ('ourf did not agcc with the vicw of the
Commission and obscrved that section 2(h) permitted s seller to retain a customer by
rcalistically meeting In good faith the pncc ol'fb~xl to the customcrs, without
necessarily challenging the sellcr's price to its customcrs.

In Microsoft CaseJ4 European Union Competition Commissioner found the

Microson, the World's largc5t soflware company, guilty of abusing its dominant
position in the markd for the personal computer operating systcm, and contravening
the EU Treaty's competition rules. The European Commission imposed on Microsoft a

" Case 26.75 Judgement of the court of13" Novcmbcr. 1975, Supra Note I I , P. 159
Reference . IP 104 382. date 24 0312004
120
record fine of Euro 497 million (US S 612 million equivalent to approximately Rs.
2630 cmres). The case had arisen out of complaint field in'December 1998 by Sun
Micro-systems, a US company and a competitor of Microsoft, alleging that Microsoft
had refused to provide interface to develop products that could 'talk' properly with the
ubiquities windows Pcs, and as a result they are not able to compete on an equal footing
in the market for work group server operating systems (WGSOS). The European
Competition Commissioner investigated the mutter and concluded thut it was a market
strategy designed by Miemsofl to shut competitions out of the market. Thaeaner, the
Commission appointed trustee to advice on Microsoft's compliance with the 2004
decision.35 In view of this very recently decision on Mnrch, IW2007, the Cornmission
has warned Microsofl of further penalties over unreusonable pricing ns intmpcrability
information lacks significant innovation," when the European Commission has scnt the
statement of objections to MicrcbsoR for hiling to comply with certain of its obligation
under the March 2004 Commission dwision, i.e., 1P104/382

Thus it is evident from the above discussion, thut actions that are cor~sidercd
anti-competitive and illegal in the context of apebments arc elso illegal, if unddaken
by a dominant firm. These would include charging or paying unfair prices, imposing
restrictions on quantities, markets arid technial development. Discriminatory behavior
and any other exercise of market power leading to the prevention, restriction,
suppression or distortion of compctition would apparently be included. 'llius, three is a
fine distinction between defknding one's market position or niarkct share, which is
pcrfcctly legal and legitimate and which may involvc c~rtainlcvcl of aggressive
competitive bchavior and exclusionary anli .. complitivc bchavior. I4owcva, u greater
threat to compctition is from the actions of dominant firms that are dctrimcntal to future
compctition. Thcse would include.

i Predatory pric~ngI disciplining existing rivals

i Actions that make it dinicult for potential entrants to entcy (exclusionary 1 anti --
competit~vebehavior )

" lhid
' lbid
 Thus, the key questions that are to be probed into in the adjudication of abuse of
dominance could include.

How will the practice hann competition?

Will it deter or prevent entry of new firms?
Will it reduce incentives of the firm and its rivals to compete aggressively?
Will it provide the dominant firm with an additional capacity to enhance priccs?
Will it prevent or reduce investments in reservch and innovation?
Do consumers benefit fmrn prices and I or greater product and service
availability'?

5.5 PREDATORY PRICING

One of the most pernicious forms of abusc of dominance is the practice of

predatory pricing. Predatory pricing occurs, wlicri a dominant cntcrprisc charges prices
below its cost over a long enough period of time with an intent nnd motive to drive a
cotiipctitor from the market or deter others from cntrririy the market and then raise
prices to recoup its losses. The geatcr the diversification of the acrivities of an
enterprise In tcnns of its products arid markets and the grcuter its financial rcwurccs,
the greatcr is its abrlity to engag in predatory bchvaiour.

'I'redator price' is dcfincd in the Competition on A d , 2002 'as the sale of goods
or provision of services, at a pricc which is below (tic cosi, as may be detrmincd by
regulations" of production of goods or provisic~nof services, with a vlcw to rcduce
competition or eliminate the compet~tors'~to be reckoned bcfore urriving at the
conclusion on whcther a dominant finn has abused 11s daminancc or not. Thus the
purpose of sclling at a predatory prrcc is to ofkr low priccs than thc variable costu"'
viz., bclow the avtragc variable costs of production, so that competitors, who we
unable to sell at that pricc levcl, gel eliminated. The normal practicc is to raise the price

" Scc 2(9) of the Compcr~ucmAct defines rcgulat~onumcrnr ~ t wrcgubrrons ma& by thc Commln~~on
undcr the Acr Cost for th15 purpose has becn dcfincd In thc C'ompclitron Comm~sntano f Ind~a
(I)etcrmlnat~ono f Cmt of Ymducl~on)Kcgulat~onq.2009 (No 6 01 2009) Puhlrhhed In (iarrtce of India,
20' Augmt. 2009
" Explanation lo S 4(2) of the Act
Supra N 32
122
to abnormal level towards what is tenned 'recouping loss' after such competitor has
been either pushed out of the market or reduced.

The MRTP Commission in Modem Food Industries ~ t case

d observed
~ that the
essence of predatory pricing is pricing below cost with a view to eliminating a rival.
The Commission fiuther made it clear that the 'mere offer of a price Iowa than the cost
of production cannot automatically lead to an indictment of predatory pricing and that
evidence of 'malaise intent to drive competitors out of business or to eliminate
competitors is required.

In the US case of Asperi Sking Co v. Aspcr High Lluids Skiing ~orp;' it was
held that, actual injury is not required to be shown as predatory pricing is a pruphylactic
provision which 1s contrived merely upon showing the eft'cct of such discrimination
has In fact injured competition sale at a price below cost is not per sc prcdatory. It has
to be prcdatory as well as anti- competitive, if it could he established that thc dominant
enterprise has engaged with a sptwfic intuit to monopolies arid there is a danpn~us
probab~lityof achlcv~ngmonopoly powcr.

In Brook Group Limited v. Brown and Williamson Tobacco ~orp;' the US

Supreme Court observed that a claim alleging prcdatory pricing under S.2 of S h ~ m a n
Act, there are two prerequisites to be provcd and established. First, a plaintiff seeking
to establish competitive injury resulting from a rival's low prices must prove that the
priccs complained of are below an appropriate mcasurc of' its rival's costs. The second
prcrcquis~teof holding a compctitor liable undcr the ant~trustlaws for charging low
prices is a demonstration that the compctitor had under S.2 of the Shtman Act, a
dangerous probability of rtrouping its invcstmcnt in bclow cost pnccs

Under the EU law, the courts have hcld that priccs below avtragc total costs but
abovc average variablc costs are abus~vc,if intcqtion to eliminate competitor can he
shown. However, thc prospctt of recoupmcnl IS not always rlccessary to be shown,
 The ingredients of predatory behavior are: that a business rival has priced it
products in an unfair manna with an object to eliminate or retard competition and
thereby g i n and exercise control over prices in the relevant market.

The Competition Act, 2002 prohibits predatory pricing as an abuse of

dominance. Abuse of dominance takes place, inta alia, if nn enterprise directly or
indirectly, imposes unfair or discriminatory price of sole of goods or service including
predatory price. Under the Act, a firm is said have indulged in predatory pricing
provided the following four ingcdicnts are mtisfid.

i The firm must be shown to have a dominant position in the market in ordw to
establish that it has market control;
i. The prices charged by it are unreasonably low;
i The finn must be able to recoup its losscs madc during the prcdatory perid;
and
i Its intention must be the ellmination of a compctrtor.

Thus predatory pricing is a kind of restrictive business pwclice. The Act yivcs
power to the Competition Comtllission of lttdia to deal with the determination of the
cost of production in adjudicating whcther a dominant firm hus indulged in the act of
predatory pricing or not. Therefore, the ('ommission hi~slo frame an economic test for
ascertaining as to when a pricc is predatory. A test applicd by both the [IS trnd thc
European courts in this regard is known as thc Arecda mid 'I'urncr t~st.~%e t a t
stipulates that any price at or abovc 'reasonably anticipatul' short - run marginal costs
is non- prcdatory and a price bclow 'reasonably anticipated' short run marginal cost is
predatory unless such pricc is at or ahove average tool cost. f{owcvcr, this test has its
own defects, making it non- applicable in some cascs. This has Icd to evcrlutiun of other
tests.44Becausc of thd difficulties involved in positing any one ofthc tests avnilahle for
determining predation, thc Hidl I.c.vd Committcu: fell that it is desirable to leave it to

" The basic proposition of this test is that rf Ihc prlce is hund lo be hclow the marginnl cost. it can bc
a q s u d that such pricc is prrdatmy. However, 11 is very d~ficultto estahlinh the mergitlal coan or cvcn
the atteragecosts of btg enterpnm. Vmlical~onccw data inyxction of ~ntcrnaldocumcntv of charmed
y"Y-
In the US & EU certain other tesls were cvnlvcd by the counr.
124
the Competition Commission of India to draw its own regulations and also revise them
h m time to time based on its own experience.''

Thus,predatory pricing can be malignant to them, if the predator's desire is to

eliminate competition or competitor. Hence, the researcher is of the mnsidered opinion
that a thumb rule can be posited, basing on the rule of reason. However, the rule should
be cautiously invoked.

5.6 DISCRIMINATORY PRICES

Unfair prices are exorbitantly high priccs, a h v e competitive levcl.

Discriminatory prices may be levied by charging different prices for ditltrcnt
customers for the same product. Priccs would be treated as discriminntory when the
same price is charged to dit'fuent customers, though the cost of supplying the product
to them varies. Discriminatory priccs creatc an unequal position among the supplics of
the samc product buying at dtfferent prices as thcse prices are unrelated to the quality
or characteristics of the product and can prejudice the compctitivc

Thc imposition of different priccs for the samc pnduct in ditl'crcnt urens
without any justification is also considered anti competitive.

In FTC 1.. An Anhcuscr Hushe lnc?' it was found that rcspondcnt, a leading
national brewer, which sclls the so called premium hcer at Irighcr prices than thc hcer of
regional and local brcwerics in great majority of markets, hod reduced its priccs only to
those customers in the St. Louis competitors, had prqxjndcrantly r~duccdcompetition
and tended to creatc a monopoly. The court obscrvcd "law is violated when thcrc is
price discrimination and that the price discrimination means m ~ n l ya price difl'ercncc.
The law prohibits p~ccs,which arc unfairly discriminatory or unfair. Fair and
justifiable discriminatio~iis not prohihit~ul".4n

'Qua 6.4.2 of the S.V.S.Kaghavan Commitvc Rcpon

" Supra note I I . P IH)
" 303US536
" Supra note I I P. 149
125
 In French Broadband the Competition Commission of French confirmed
the judgment of the Court of France Instance dismissing entirely the appeal by France
Telecom SA, formerly Wandoo Initiative SA, in mpect of the Commission's 2003
decision predatory pricing and confirming the f 10.35 million fine imposed by the
Commission. On 16' July, 2003, the Commission fined Waneduo f 10.35 million for
charging predatory price for its pack extense nnd Wanadoo ADSL services as part of a
plan aimed at excluding competitors from the market for high speed intmct a c ~ e s s . ~

5.7 -
DISCRIMINATORY PRICES REBATES, DISCOUNTS ETC.

Unjustifiable rebates, discounts or snlc inccntivcs arc discriminatory in nature.

A discount is a deduction in a previously determind price grontt~lto a customer or a
class of customers. A rcbatc is an allowance cxtcndcul by the seller to the buy& on
account of a past transaction or transactions. An~ongthe different lhnns of permitting
discounts are cash discount, functional discount and quantity discount. A cash discaunt
is granted for payment in cash upon dclivcry or within spificd short period. A
functional discount is a reduction Froin the nonnal price grunttd to n consumw, who as
a purchastr, characteristically performs a purticular economic function such as
wholesaling or retailing quality discount llinga on the quality purchased in s single
transaction or during a certain ptxiod of time.

in FTC I,, tienry Hrochco 'I a scll~rbrokcr rcduced his bmkcruyc commission
from 5% to 3% in order to meet the bid of a favorable buyer, which was rcllcct~din the
seller in reduction of thc price. Sim~larlyconcessions were granted on subsqucnt sales
to the same buycrs but not to anothtr. The US Suprtme ('our( held that thc seller's
brokers violatcd S. 2(c) of the Clayton Act.

4<j
Ref: Memo 07, 38. 10-01-2010http"'cc curope d c c ~ m m~compc!ltcon/tndcxm.html
w ~ e IPJ
e 03'1025
" 3b3USIM
126
5.8 LIMITING OR RESTRICTING PRODUCTION

Limiting or restricting market for goods or services is anti- competitive when a

supplier in a dominant position insulates a particular market fmm another and thereby
engages in a differential pricing according to the level that each market hear.

In Director General rl. Gassom Gases Pvt. ~ t d . " The MRTP Commission held
that the condition imposed by the respondents about distributors ensuring smooth
selling of 100 gas commissions per month and getting a maximum of 3000 gas
connections over a period of 30 months from the dale of first supply ore restrictive
trade practices. Abuse of a dominant position of marker power can differ widely kom
one sector to another. Therefbre, the evaluation of an abusc of dominiin1 position is e
question of fact and degrt~'.

5.8.1 RULE OF REASON:

The doctrine of rule of rcason IS cstablisl\~duncicr the (IS anti- trust 1,uw. This
doctrine rcquircs the court to cxaminc tbc circu~nstonccssurrendering Ihc filrmntion of
a combination and thc pattern of its business bchavior lo ascertain whether intent to
monopolize exists.

In Standard Oil Co. re. Unitd Stnlcs it was obscrved by the liS Suprc~ncCourt
that the company's power arid control of market was such us lo crcatc n prime fncie
presumption of intent and purpose to mainlain dominance not US a result of normal
methods of Industrial development hut by means of combinat~on.

In Tata Engineering and Locomotive ('(1. I.td. 1: Hcgislrar of Restrictive Trade

~grccments.-'~~hc
Suprcnlc ('ourt of India obscwcd that to dctmmine wl~ctherthe
restraint promoted or supprcsscd competition, it was irnpcrrctivc to considcr t h m
matters; 'first, wha~hcts are pt~uliarto the business to which the restrain1 is applied.
Second, what was lhc condition hcforc and after the restrain was applid, Third, what is
the nature of the restraint and what is lhc actual and probable cficts' of such restraint.

''( 1995) 84 cump caws hi 5 IMR7 PC)

'' 1977 2 SCC 55.
127
5.9 THE PROCESS OF DEALING WITH ABUSE OF DOMINANT
POSITION

The power to hold inquiry into the dominant psition of an enlerprise is

conferred on the Competition Commission of India established under the Competition
Act 2 0 0 2 . ~The Competition Commission either, on its own motion or on the receipt of
complaint, accompanied by fees%n1 my person, consumer or their nssociation or
trade association or on a reference made by the Central Government or a State
Government or a Statutory authority, inquire into any alleged contravention of the
provisions of Anti-compctitivc agrmments or abuse of dominant position." "e
Commission has to consider certain factors while inquiring into the abuse of dontinant
position.57The fttctors that the Commission has to consider are like creation of harriers
to new entrants in the market, driving existing competitors out of thc market,
foreclosure of competition to new entrants in the market ctc. In case an enterprise is
considered by the Cornpetition Commission of India to have abustul its dominant
position, then there are penalties that cnn be imposed and various directions can also be
given by the Commission. The Commissions can levy a penalty of not more than 10%
of the turnovcr of the enterprise. Further, it can pass "cease and desist "order, and pass
such other orders as may bc corisitlcrrd appropriate. It can also r~wotnmcndto the
cnlerprisc".5w'T'hus, the Competition
Central Government for the "division of dor~~inutit
Commission of India is armed with power to direct the cnterprisc to disclose
information to its competitors or to rwommend divisioti of an enterprise.

'' Sec. 19(1) o f the Competition Act. 2002

" Regulation 49(1) of' thr.Cornpet~titmC'omn~~ssionof ind~a((;cneral) Amnldmcntr Rcyula1ion,2009
(No.5 of 2009). Published in the (iazrttc of India, Extratndlnary, pan Ill,ncction 4 tm 20 Augunt. 2009.
Provides that :
i. Each information received under clause (a) of sub wcttnn ( I ) of ~cction19 of the Act from any
pemn shall be accompanies by p r c ~ ~ fhav~ng
of paid thc fees an undo
ii. Rupees 50001- in caw o f Individual of IliJF. or N(iO or Consumcr Arw~ciationor a Corpantive
Society or a Tmst
iii. Rupees 20000;- in cavc of firm or company having lumovcr i n the prscding year up to rupen one
crore or
iv. R u v 50,OOI- in caws MI covercd uilder c l a w (i) or (11)
" lbid
' I Sc IY(4) to 19(7) oflhc Cumpctilor Act, 2002
" lbid Sec.19
128
E ~ T E R R I T O R I A LJURSIDlCTION OF THE COMMISSION

The Commission is conferred with extraterritorial jurisdiction as the

Competition Act, 2002 explicitly states that any abuse of dominance orignating outside
lndia but having effects on the lndian Economy can be inquired into by the
Commission Thus, the Act explicitly recognizes the 'effixts doctrine'." Abusive
conduct taking place outside India but having an adverse effect on competition in lndia
can also be enquired into by the Competition Commission to address the competition
concerns arising out of such acts.

5.10 DISTINCTION BETWEEN RESTRICTIVE BUSINESS PRACTICES

AND ABUSE O F DOMINANT POSITION

Section 3 deals with agreements betwwi undertakings or trade practices camed

by a
on by them including cartels; while Scction 4 with the abuse of do~ni~iuncc
dominant undertaking. tlowcvcr, both thcsc sccticms aim to actiicvc the sarnc objective
of maintaining and promottng compctition within India. tlencc, tllcsc provisions are
supplementary and complerncntary to cach other. tlowever, these pwvisions deal with
dtstinct situations by difrercnt rules.

An agreement betwcen partics, that has thc efTcct of prcvcnling, dislorting or

suppressing compctition in any manner, would fall within the ambit of section 3, whilc
the bchavior conducted in conscquc%cc of thc agccmnntnt amounts to abuse of the
collective dominance. Under section 3, it is thc joint or conccrtcxf action of one or mare

'3,32, ofthe Con~pctilionAct. 2002 as amended by the Competition (amendment) Act, 2007 , pmvider
that the Cornmissinn shall, notwithstandtng that,
(a) an agrccmenl refctred to in sectton 3 hnn been entcrcd inttr out~idcIndia; (or)
(b) any party to such agrecment is outside India: or
(c) any enterpnsc abusing the dominant pcwltita is outride ladlo: or
(d) a combination has taken place outside India; or
(e) any party tu combination is ouhidc India; or
(0 any other matter or practtcc or action arising out of such agreement or dominant posit~onor
combination is outr~delndia.
Have power to inquire in accordance with the provirions contained in rctionm 19.20.26.29 and 30
of the Act into such a g m e n t or abux of' dominant pnrititm tr cnmbinat~on.~fnwh agreemen1 or
dominant pnsit~onor combtnation hat. or in likely to have, m appreciable mdvcrw cfiwl on
competition in the rclevant marka in India and p m swh ordm an it may &em fit in accordam
with the provirions of his Act.]
undertakings that is in question whereas under Section 4, it is tbe action or d u c t of
dominant undert&ng that is in focus. The agreement under section 3 will affcct
competition, if it fixes or influencesprim, while the abuse of domination under section
4 affects the slNcture of competition. Abusive conduct of a dominant enterprise or a
group may result in a competitor leaving or preventing a potential competitor h m
entering market. Agreements relating to intellectual properly rights, export ventures arc
recognized as statutory exceptions to the nppl~cationof stction 3, provided thcy are
reasonable in nature but the same arc: not recognized as exceplions in regard to the
abuse of dominance. Thus an undertaking may commit an abuse of dominant position,
if it acquires an undertakmg holding an exclusive paten1 license. Restrictive trade
prnctices can be indulged in by dominnnt as well us non-dominant cntcrpriacs while
abuse of dominant position can be ~ndulgedin only by dominant cnlerpriscs or a p u p .
Therefore, the legislative ~ntent is very apparent that nc~n-dominant entities are
incapable of committing abuse of dominance.

Thus, scctions 3 and 4 deal with different situations impacting cc>mpctitionbut

both the sections aim at fostering compclition at thc murkct place.

5.1 1 COMPARATIVE LAW

5.11.1 ABUSE OF DOMINANT PQSlTlON IN EUROPEAN COMMISSION
AND UNITED KINGDOM.

The competition principles of the EC and thc UK would have bccn dc~rived
of their full effectiven~?is,if thcy didn't contain provisions clculiny with the
competition probl~msthat may cmanatc from the unilalcral bchvaiour of finns
possessing economic p w t r . For this obvious reasnn, both the EC' and IJK systima of
Competition Law, like other systems around the World, contain provisions dealing
with this business phenomenon, which is widely known as ahusc of d~minancc.~'

The EC treaty and UK's Compcqition Act, 1998 prohibit a busin~rr~

which
holds a dominant posit1011 In a markct from abusing that A dominant

Arlccle 82 of I-U and 5 IR(2) of Ihe Compclltion Act. 1998 of U K Act, wt out cxamplcw of conduct
t h a ~may. tn pafllcular conslcluic ahure of dominance h IJK'x Compelrt~unI sw prohlbllK abuw of
conduct lhal may affmt trade w~thcnthe dnmcnt~cmonomy or bclwecn membcr %+teao l ~ h ef U
lb~d
130
 position in a market essentially means hat a business is gcnaally able to behave
independently of competitive press- such as other competitors, in that market.
Conduct which may be considered as abuse by a business in a dominant position
includes:
k Charging exorbitantly high prices
> Limiting production
B Refusing to supply an existing long stnnding custnmm without any
goodljustifying reason
ii Charging different prices 10 ditlicrcnt customcn, when there is no
difference whatsoever in what is being supplied.
i Making a contract conditional on factors thul have nothing to do with the
subject of the contract.

Thus Article 82 EC addresses the abusc of doniinant position 111 the Ell, This is
where dominant firm, oHen a foreign multinationul colnpany, exercises its market
power. 62

There is no specific exclusion tiom Articlc 82 but under the comtnunity law the
following types of conduct are In efTc~t,excluded from the appl~culionof Article 82 :
conduct which would result in conccntrntion with n community dimension and thereby
be subject to the EC merger regulation, or conduct which is carried out by an
undertaking entrusted with the opuratlon of s~wiccsof gcncml economic i n t m t or
having the character of a rcvenuc producing monopoly, in so far na the application of
Article 82 would obstruct the pertbrmancc, in Law or facts of the particular tasks
assigned to the undertaking. 'Ihc modemi~ationrcyllation on the appl~cationof the
Rules of competition has d~xlaredhat "lhc abuse of a do~ninaatposition refined to in
Article 82 of the 'Treaty sirall be prohihitcd, no pnor decisioti to that cllie~tbeing
rcqulred." It has also laid the onus of prcmf o f an infring~mentof any of these Articles
on the party alleging infring~mcnt."'

'? Erika Szydczak and Adam cygan, undertaking EU law.1' ed, 2W5, P.148
01
I.uis Orit 2 Balnco, K' Compelitionprocedure. I* cd, 19% P. 162
131
 The Competition Act of UK provides that any conduct by any undertaking which
affects the trade within UK will amount to abuse of dominant positionM UK's
Competition Act, 1998 with certain exclusions but no exemption is provided in the case
of abuse of a dominant position.65The principle of Moderni~ationRegulation of EEC
stated above would apply to the UK also.

Monopolizing or attempting to monopolize nny part of the trade or cammerce

among the several States, or with foreign nations which is an o h m under Section 2 of
the Sherman Act, would correspond to abuse of a dominant position."

5.1 1.2 LAW RELATING TO ABllSE OF DOMINANT POSITION IN UNITED

STATES

In most jurisdictions, including the European ll~lionthe term used is abuse of

dominance hut in the US, the counterpart term for it is monopolization or attempt to
monopolization. Therefore, in the Unitrxi States thcrc is no concept of 'Abuse of
dominant position' and what is prohibited is monopoly or attcrnpt to monopolize. It
may be noted that undcr the Sherman Act. no spccific conducts havc bccn enumerated
which are not to be indulgcd in by undertakings having monopoly powcr or in their
attempt to monopolize. The US law is more tolerant of monopc~listicbehuviour,
recognizing that monopoly firms also havc lihtgy to wlmpetc and cqgagc in hard
competition, evtn if it may Icaci to thc extinction of rival firnis. 'The US law focuses on
harm caused to consumers and not thc hi~nncausal to competitors, while the EC
approach so far to be that if competitors arc unreiisclnably hanncd, it would amount to
harming competition.h7

In United States v. (irinncls ~ o r ~ , ith 'was ubscrvcd "'l'hc otTcncc of monopoly

under section 2 of the Sliman Act, 1890 has two clcmcnts: (1) thc possession of
monopoly power in the relevant market and (2) thc willfirl acquisition or mainteniince
of that POWLT as distinguished from growth or dcvclopmcnt as a consequence of a

" Scctmn I or ofthc UK cornpellllon ALI, 1998 pro\id~-ithal

"

"'I b ~ dwctlon 19
Mahn M.Dabbah, lhe Internat~onalof An(1lruu1policy, I rtcd. 2003. P 167
'' Vinod Dhall. 20f)7,0vcrv1ou Key concepls In ctvnpetllrm law. V l n d 1)hall'dcd)I'ornpt~ctonlaw
Today,Oxford U n ~ v n s ~Presx.New
ly Iklhl, p I S
ba 384 US 563.(1 196)
132
superior product, business acumen, or historic accident". The said observation has
been cited with approval in a number of cases such as llan Golan v. Pinged Enterprises
lnc? Aspen Skiing Co. rr Aspen Highlands Skiing ~ o r p n . 7and Eastman Kodak Co.
v. Image Technical services 1nc.l'

The US Supreme Court observed in Spectrun Sports ,: ~ c ~ u l l a nthat' ~ to

demonstrate attempted monopolization a plaintis must prove that the defendant has
engaged in predatory or anti-competitive conduct with a specific intent to monopolize
and a dangerous probability of achieving monoply power.

The Sheman Act, 1980 declares that p~7snns"Who shall monopolize, or

attempt to monopolize, or combine or conspire with any person or persons to
monopolize any part of trade or commerce among the several States, or with t'owign
nations, shall be deemed gu~ityof a felony and on convection thereof, shall hc
punished by fine not exceeding onc million rlollars, it' a corporntiori, or if any other
person one hundred thousand dollars, or by imprisonment riot exceeding three years,
or by both said punishments, in the discretion of the ~ourt." In othm words, under
the Sherman Act, monopoli~ingor attempt to monopr~lizcarc olTences punishable not
only with fines but with an imprisonment up to a period ol'three years.

Under the laws of the Untied Stnta, the rcnicdy that is 'nost commonly uscd
in the enforcement of section 2 of the Shcrman Act, 1890 is Injunction. Structural
remedies, i.c., those that may rcsult in the hrcak up ofthe monopoly is a drastic step
and carries with it an usually high risk creating inadvertent incficiencies in the
economy that would bc counterproductive from the anti trust stand point.74

In the antitrust law of the IJnitd States, a number of cx~mptionsare

available. Some of the major cxcmptions from antitrust laws may he grunted undcr

Decided la No. ~ ( 2 0 0 2 )
''472 US 385 (1985)
" 504 US 451 (1992)
US.447,45H 1993)
" Section 2, Sherman Antitru%tAct
" United Sum submission: t:CD " A b w of dominance ad mourpnli;ratinn",
tm Fehrusry 20. 2010.
httpi~~.occa.mg~delaoecdiOib172379408.pdr.accnKed
133
 the Moccasin - Ferguson A&'' the Cappes Volstead A C ~ ' and
~ the Noms - La
Guardia and the Webb - Pornerenee Act and the Export Trading Company
A&" The exemption is known as the Noerr Pennington (carved in a series of
supreme court decision) doctrine renders the antitrust laws inapplicnble to the
individuals or group action intended to influence legislative, executive administrative
of judicial decision making, providcd that such action is not a mere sham to cover
what is in reality nothing more than a baseless interference with competitors ability to
compete.

5.12 CONCLUSION

Thus, abuse of dominant position by an enterprise is a serious contruvention

under the Indian Competition Act, 2002. It envisages that there shall bc an ahuse of
dominant position, if a dominant enterprise or group imposes unfair or discriminatory
conditions or prices in the purchase or sale of goods or provision of service or if it
limits or restricts production of goods or provision of services or technical and
scientific development or it denies market access to new cntrnnts or competitors ctc.

It is interesting to notice that dominant position is not dcfinrxl on thc basa of

any arithmetical parameters or any podicular share ofthe mctrkct unlike in the cesc of
the earlier MRTP Act, 1969. It is apparently envisaged under the ('ompetithl Act.
2002, that dominance is to be assesscti and judgcd by thc abll~tyor power of an
entcxprise or a goup to operate indepcndently of competitive forces or to affcct is
competitors. The Act also lays down an array of factors which the ('ommission tlccds
to take into consideration in asccmining whcther an enterprise wjc)ys a domination
position or not, such as market share, s i x and resources of thc cnt~rprisc,size and
importance of competitors, economic power of the entcvrises, vc~ticalb a m m etc.
which would definitely involve a fair amount of ~wnomicunalyscs. Whethcr an
enterprise or a group enjoys dominance or not would hc judgcd basing on the ovcrall
-- - --
" Under this Act, certain aspcctx of the burinem lnvurancc ruhjcct to %talc regulation arc grunted
exemption
'b Under this Act a limit4 exemption has hcm provrded for the collcctrvc markctiny activiticn of

a 'culrural co operatives
' c n d n Urse Arts. a g n n a l excmptmn 18 providcd with repd t c ~t h mllcctive bargaining rtivitics
hetween organized labour and employenr
Under thew ACLF limited exemptions from the Shcman A d arc providcd for ~ I I Crxpofl trading
activitim of ccnrficd e x w trading arvriation
134
cumulative effect of all the factors enumerated in the Act. Mere acquisition of
dominance would not be frowned upon by the Competition Act but its abuse is
certainly assailable undcr the Act. Whether a dominant firm has abused its dominance
or not would be ascertained with reference to the relevant market in India.

The Competition Commission is armed with adequate powers for preventing

abuse of dominance by a dominant firm or p u p t? which include inter alia the power
to impose hefty penalties, issue cease and desist orders and 1 or recommend to the
Central Government for the division of enterprise or group concerned. It is vcry
heartening to notice that the Competition Commission has made its presence felt when
it issued interim orders against the Karnataka Film Chamber of Commerce by issuing
interim injunction against it for lifting restrictive conditions on the running of the
Movie "Ravnna" in the State of Karnataka and further, dircct~ulthe Director General of
Investigation to hold investigation whether such trade pructice indulged in by
Karnataka Film Chamber of Co~nrnercetantamount to abuse of dominance." Thc
Commission subsequently upheld its interim order in its final hearing held on Junc 24,
2010. However, the Act doesn't treat tl~cabuse of dominance by the dominant finn as a
criminal ofTence entailing prosccution und imprisonment on the individuals operating
behind thc cloak of corporate personality and which is definitely a shortcoming in the
present Act. The recognization of such contraventions of competition law as criminal
offences would certainly deter individuals managing and administruting the oflairs of
business entities from indulging in such abusive conduct to the detriment of
competitors and consumers. Therefore, the law slid policy makers must seriously
contemplate on thcsc lines for making necmsary changes in the C'ompctition Act, 2002
at an appropriate time.

Thus, the provisions pcrlaining to don~inance& its abusc by a dominant tirm or

a group as embodied in the Competition Act, 2002 would delinitely bc conducive for
promotion of competition culture and procas in the Indian Merkel apart from
safeguard~ngthe interests of consumers.

Commlwton to Ravan'u rmw, Thc Il~ndu.Ncw Ilclh~.June. lo*, 2010

m~ompet~~~on
135
 -
Chapter VI

REGULATION OF COMBINATIONS UNDER

COMPETITION ACT, 2002