SPECIAL ASSIGNMENT OF CRITICAL THINKING ESSAY (SACE)

Repeat-2 Examination, March-2021

SUBJECT :- Competition Law (Optional)

SEMESTER :- VII

NAME :- Lucky Tandon

BATCH :- XIV
I.D no. :- 14/2014/1032
Roll no. :- 75

HIDAYATULLAH NATIONAL LAW UNIVERSITY, RAIPUR (C.G.)

Question.1

ANSWER -

Introduction
The statement given in the question was one of the few cases in which grant of interim relief was
effectuated by the competition commission of India. As a matter of fact, since the year 2009,
only in five cases has this power been used by the competition commission of relief has been
granted.1Talking about the recent times, the provision has been used by the competition of
commission of India in the case of Indian National ShipOwners Association versus Oil and
Natural gas Corporation Limited.2 In this case, the conditions laid down by the honourable
Supreme Court of India with respect to grant of interim relief were duly complied with by the
party in question as a result of which, interim relief was granted.
The CCI also granted interim relief to the Confederation of Real Estate Developers Association
of India-Northern Capital Region ("CREDAI") v. Department of Town and Country
Planning, Government of Haryana & Others ("Respondent") 3, “in which the developers were
compelled to pay external development charges (EDC) by the government. However, despite
receiving EDC from developers, the Respondents have failed to provide any external
development services, according to the CCI. According to the CCI, while granting interim relief
to developers, they have paid 10% of the EDC amount and deposited 25% in the form of bank
guarantee, and as a result, Respondents will not take coercive measures against developers for
the remaining instalments until the final disposition of the matter is reached.”

Section 33 of the Competition Act

Before delving into the guidelines issued by the honourable Supreme Court of India with respect
to validity of issuance of an interim order, it is extremely pertinent for students of competition
law to focus on the legal section in question. In the instant case, sanction with respect to grant of
interim order has been given to the competition commission of India by virtue of section 33 of
the competition act, 2002. According to section 33, in cases where investigation pertains,

1
Case No. 01 of 2018 (order dated 15 June 2018), Case No. 40 of 2017 (order dated 1 August 2018), Case No. 107
of 2015 (order dated 13 April 2016), Case No. 06 of 2015 (order dated 3 September 2015) and Interim Order.
2
Case No. 01 of 2018, order dated 15 June 2018.
3
Case No. 40 of 2017, order dated 1 August 2018.
provisional decisions can be passed by the competition commission of India until the conclusion
of the proceedings.

Mandatory Condition Laid Down by the Hon’ble Supreme Court

The essential conditions with respect to issuance of interim relief were laid down by the Hon’ble
Supreme Court of India in the case of CCI v. Steel Authority of India Limited4.
These conditions are enumerated hereunder:
1. “Formally record its satisfaction (which must be of a much higher degree than formation
of a prima facie view under Section 26(1) of the Act) in clear terms that an act in
contravention of the stated provisions has been committed, is being committed, or is
about to be committed”;
2. It is necessary to issue an order of restraint; and,
3. On the basis of the evidence before the Commission, there is every likelihood that the act
will be committed.
In the given case, an interim application was filed under section 33 of the Competition act, 2002.
In the instant case, the informant was the Indian National Shipowners Association and the
complaint was made against Oil and Natural Gas Corporation Limited. It was reiterated by the
commission that there were conditions which had to be satisfied before issuance of an interim
order to a particular party. The aforementioned conditions were reiterated by the honourable
Supreme Court of India and laid down an extremely important test with respect to the validity of
grant of an interim order.5
It was after the judgement passed by the honourable Supreme Court of India, the jurisprudence
pertaining to interim order and the legal position became clear. After this judgement, massive
digitalisation has characterised the trend of change in the market due to which, there is a
revolution in the experience of consumers in the market. At the epicentre of this rapid change has
been the competition law which focuses at ensuring healthy competition among players in the
market. In the past 11 years, barely over four interim orders have been passed and it is quite clear
from this trend that interim measures are one of the most under-used tools of the power of the

4
(2010) 10 SCC 744.
5
“Principles for grant of interim relief: (a) a prima facie case exists (this is higher than the standard required to order
an investigation), (b) balance of convenience lies in the applicant’s favour and (c) not granting the interim relief
would result in irreparable harm to the applicant/cause harm to competition.”
competition commission of India. However, with respect to recent trends and the exigencies of
the COVID-19 pandemic, there has been a strengthening of the dormant tool in the paradigms of
renewed interest from numerous competition authorities in digital markets and in the world of
internet and globalisation.
To ensure the authority of interim orders, Section 42 of the Act may be referred to. “Section 42
provides a penalty for contravention of orders and/or directions of the Competition Commission.
An inquiry can be made in compliance with the laws under this act. If any person, without
reasonable cause, fails to comply with the orders or directions of the Commission issued under
Sections 27, 28, 31, 32, 33, 42-A, and 43-A of the Act, he shall be punishable with a fine which
may extend to rupees one lakh to a maximum of rupees ten crores, as the Commission may
determine. If any person does not comply with the orders or directions issued or fails to pay the
fine imposed under sub-section(2), he shall, without prejudice to any proceeding under Section
39, be punishable with imprisonment for a term which may extend to three years, or with fine
which may extend to rupees twenty-five crore, or with both, as the Chief Metropolitan
Magistrate, Delhi may deem fit, provided that the Chief Metropolitan Magistrate, Delhi shall not
take cognizance of any offence under this section save on a complaint filed by the Commission or
any of its officers authorized by it.”6
The ‘Make My Trip’ Dispute
The CCI issued the first in a series of numerous investigation orders against MMT-GO and
Oravel Stays Private Limited (also known as ‘OYO Rooms') in October of this year. The
complainants said that MMT-GO and OYO Rooms (a cheap hotel franchise business) had
engaged into an exclusive agreement, which resulted in the delisting of the complainants' hotels
from MMT-website GO's as a result of the arrangement. Due to this, the Complainants suffered a
revenue loss and an erosion of investor trust, both of which jeopardised their capacity to remain
competitive in the market.
The CCI came to the conclusion that MMT-GO was the leading player in the Indian market for
online intermediation services for hotel bookings on a first-look basis. It also pointed out that
OYO Rooms has significant market strength as well. The inquiry will assess whether or whether
the exclusive agreement between MMT-GO and OYO Rooms would result in a reduction in
competition in the Indian market.

6
Supra
After a year had passed since the start of the inquiry, the Complainants submitted an application
for interim relief seeking that their company be re-listed on the MMT-GO website. The Interim
Order resulted as a result of this.

A key support for the Interim Order is the CCI's conviction that Complainants' revenue loss,
investor confidence loss, and inability to attract sustained investments can be traced back to a
single event, namely, the delisting from MMT-aggregation GO's website as a result of the
exclusive agreement with OYO Rooms.

“CCI also acknowledged that if the hotel aggregators are not re-listed while the inquiry is
ongoing, they would be forced to close their doors (thereby irretrievably losing competitors). The
economic impact of the epidemic on the Indian hotel sector has received some attention in recent
months. While the Interim Order did not provide an explanation for its judgement that delisting
should be viewed as a substantial contributor, this is especially troubling considering the
simultaneous timelines of the epidemic and revenue losses. It is instead argued by the Centers for
Disease Control and Prevention (CDC) that re-listing is likely to counteract the catalytic effect of
delisting during a pandemic. Despite the above, Fab Hotels reported an increase in yearly
revenue of 34% following its delisting from the stock exchange.”

The CCI appears to have shifted the burden of evidence on MMT-GO by following the line of
reasoning outlined above in its decision. The CCI appears to be expecting MMT-GO to
demonstrate that the sluggish growth observed by the Complainants was not a result of their
delisting from the stock exchange. The CCI appears to have undervalued the costs paid by the
aggregator as a result of the addition of hotel franchisees when evaluating the convenience of the
aggregator. It is not explained in the sequence why promotional budget restrictions and
decisional weariness would not cause MMT-GO to be inconvenient during the epidemic, to name
a few examples.

As stated by the CCI, the request for relisting is necessary immediately since the Complainants
rely on the MMT-GO "platform." The CCI's preference for platforms appears to stem from its
concern that platforms serve as a gatekeeper for information. While the CCI references
publications that have highlighted the discriminatory behaviour taken by "gatekeepers," these
findings do not appear to be unique to MMT-GO, which is a concern for the organisation. The
reports, on the other hand, are used to justify immediate action on the part of the CCI.

Despite the fact that the CCI makes brief references about MMT-aggregator GO's business
model, it appears that the platform is mischaracterized.

It's possible that the CCI's study was influenced by the demystification of MMT-GO as an
aggregator. Platforms provide infrastructure for the development and operation of a product or
service while also providing consumers with a variety of options. Access to a platform is
required in order for the product or service to function properly on the market. Aggregation, on
the other hand, is a very successful marketing and distribution method.

Recognize that, upon completion of the inquiry, evidence may reveal that the acts of MMT and
OYO Rooms (either collectively or individually) contributed to the foreclosure fears of the
homeowners. An interim injunction must, however, be granted only if there is compelling
evidence that the market would be damaged by the time the inquiry is completed. It is simpler to
accept that this is likely to be the case in the case of a ‘platform,' when access to the platform is
required for the operation and development of the product/service in question. The reduction in
the number of options available to consumers is the consumer damage in the event of a platform
functioning as an exclusionary. A consumer's efficiency is achieved by the aggregator's exercise
of judgement on his or her behalf and the provision of a restricted number of options. The
customer's decision fatigue can be detrimental, since information saturation may lead to the
consumer making an impulsive purchase to put a stop to the mentally taxing job of assessing
choices. This distinction may appear trivial, yet it is critical in the context of competitive
analysis.

In this particular instance, the hotel aggregator opted to show the listings provided by one
notable hotel franchise over the listings provided by other hotel franchisees. Consumers turn to
aggregators in order to prevent becoming overwhelmed by choices. Aggregators compete with
one another depending on the quality of the content they curate. Because of this unintentional
conflating of the two, a hotel aggregator has been subjected to a remedy that would be more
suited for a platform at this point in its development. Consumers would have to sift through
1000s of more options if the Complainants were included on the list. Such an interim order to re-
list may be premature pending the findings of a thorough investigation, and in the absence of
economic proof tying market foreclosure to the aggregator, such an order may be deemed
premature.

● Critical Evaluation of Approach Taken by CCI: The determination of the CCI to keep
industry alive during these difficult times is commendable. A new method between ex-
ante and ex-post regulation is being established with the Interim Order, in which
remedies are given as a pre-emptive step while an inquiry is being conducted. It should
be noted that, in the digital sector, it is necessary to strengthen the evidentiary threshold
for providing temporary relief in order to protect consumers. Not every aggregator or
platform is a gatekeeper in the traditional sense. In spite of this, according to the CCI's
broad interpretation of denial of market, all online intermediaries are deemed to be
gatekeepers by default.

Conclusion
In most cases, interim measures have been given in order to maintain the status quo. Ex-ante
remedy appears to have been sought by the CCI, i.e. to avert possible harm before it was granted.
Utilizing the competitive toolkit in this manner is a novel approach. Even ex-ante remedies,
however, must be backed up by proof of realistic harm that can be traced back to the accused
conduct itself. Drop-in revenue in the hotel sector during a pandemic is probably a more
compelling reason for the Complainants' revenue loss and sour investor sentiment than the
Complainants' loss of income.

Another advantage of decreasing the amount of options available on an aggregator's website is

that it lowers decision fatigue while simultaneously increasing competition amongst aggregators.
As a result, it is necessary to coordinate intervention measures with the underlying competition
policy goal. Meanwhile, firms operating in the digital marketplaces are urged to conduct a more
thorough assessment of their commercial agreements for exclusivity terms.
Question. 2

Answer.

Introduction
Despite the fact that it is urgently needed in a dynamic market like India, the effective notion of
collective dominance is still missing from the country's competition legislation. It has happened
time and time again that the absence of the notion of "collective dominance" in India's
competition legislation has prevented the Competition Commission of India ("CCI") from taking
appropriate action when it is needed to protect consumers. During the Italian Flat Glass case 7, the
Court of First Instance was the first to acknowledge the idea of collective domination as a valid
legal term. Collaborative dominance refers to an environment in which two or more independent
undertakings, linked together by economic ties, work together to gain a competitive advantage
over other players in a particular market, while nevertheless remaining separate and independent
operations. It is possible to trace collective dominance in both vertical and horizontal
marketplaces. The parties that are in a dominating position do not have to be a member of an
anti-competitive agreement or cartelization in order for them to be considered dominant. The
purpose of this essay is to stress the importance of recognising collective dominance in the
context of Indian competition law.

Overview of Legal Framework

Abuse is defined as occurring when a business or a group of businesses takes advantage of their
current position in a large market in an exclusionary or/and exploitative manner. The Act
contains a thorough list of activities that are considered to be abuse of a dominating position, as
well as the conditions in which these practises are prohibited. It is only when such tactics are
received by an enterprise that is taking advantage of an existing condition in the relevant market
in India that they would be deemed to be an abuse. Abuse of dominating position is determined
in terms of the established types of activities performed by a prevailing enterprise in order to
maintain such position. According to the law, such activities are prohibited. Consequently, any
misuse of dominant position as defined in the Act by a prevailing business will be rejected by the
court.

7
[1992] European Court Reports 1992 II-01403
Following the definition given in Section 4 of the Competition Act, 2002, dominant position is
defined as a feature possessed by an enterprise in a significant market in India that enables it to
operate independently of serious powers winning in the market and to exert influence over
customers, competitors, and the market in its favour.
Traditional definitions of market dominance have been applied to enterprises or groups of
enterprises based on their percentage market share of the whole market. However, a variety of
diverse factors play a part in determining how well a business or a group of businesses do in the
market. These are some examples:
1. A percentage of the market
2. The scale and financial resources of the undertaking
3. The magnitude and prominence of competitors or competitors' contenders
4. The amount of money that will be spent on the project
5. A horizontal combination or integration with a vertical component
6. The endeavour or undertakings are dependent on the consumers' support.
7. The extent to which the market has segment and exit obstacles.
8. Buying power that acts as a balancing force
9. The market's structure and size are important considerations.
10. A source of dominating status, regardless of whether it was gained by a resolution,
legislation, or other means.
11. Social costs and responsibilities, as well as the commitment of large company to take
advantage of the current circumstances in order to enhance their financial position

The Competition Commission of India has also been given permission to take into account any
other criteria that it deems relevant for the protection of dominant position.

In the exercise of the authority conferred on it by Section 19 of the Act, the commission may
inquire into any alleged violation of Section 4(1) of the Act, which prohibits the misuse of a
dominating market position. Specifically, Section 19(4) provides a thorough list of criteria that
the Commission will take into consideration while conducting an investigation into any
accusation of abuse of power. Market share, size, and assets of the venture, size and importance
of the competitors, dependence of purchasers, passage obstacles, social commitments, and
expenditures in the relevant regional and item marketplace are a few of the elements that must be
taken into consideration.8
On finding evidence of an apparent case of abuse of dominant position, the Commission will
direct the Director-General to conduct an investigation and prepare a report, which will be
forwarded to the parties involved. In matters such as summoning or permitting the participation
of any individual and questioning him on the promise, demanding the reveal and creation of
documents, and accepting proof on an affidavit, the Commission has the powers conferred in a
Civil Court under the Code of Civil Procedure. In order to finish an examination, the Director-
General is vested with forces of the civil court rather than forces to conduct a "search and seize"
operation.

Evaluation of the Position of Law in India with Respect to Group Dominance

Section 4 of the Competition Act, 2002 (the Act) bans abuse of dominance by businesses that
possess a dominating position in a relevant market under the current Indian legal system.
Furthermore, the word "dominant position" is defined in Section 4's explanation (a) of what it
means. It refers to a position of power that enables a business in a particular market to "act
independently of competitive dynamics existing in the particular market or to influence its
competitors, consumers, or the relevant market in its favour." A single firm, rather than a group
of enterprises can therefore claim the title of "dominant position" under Section 4 of the
Competition Act. This Section is notable for the lack of the notion of collective dominance,
which has the consequence of reducing the ability of parties to be penalised when there is a
collective misuse of dominance.9

The failure to take proper action against the misuse of collective dominance has resulted in a
number of situations when such action would have been permitted under the law. In a recent
decision, Ashok Kumar Vallabhaneni v. Geetha SP Entertainment LLP10, the CCI found that
“the Act did not provide for this notion, and thus dismissed the case. According to the factual
matrix, the defendants who operated in the states of Andhra Pradesh and Telangana were

8
https://www.cci.gov.in/sites/default/files/advocacy_booklet_document/AOD.pdf
9
https://www.lexology.com/library/detail.aspx?g=6ed7c619-22c7-4706-9bbe-b65f524d4202
10
Case No. 17 of 2019
engaged in the business of film production and distribution, among other things. The defendant
refused the informant access to a suitable number of screens for his film "Petta," while other
similar films were given access to a greater number of screens without providing any
explanation.” It was claimed by the informant that there was cartelization among the defendants,
as a result of which he was denied a sufficient number of screens for his film. Additionally, he
argued that the defendants' actions not only had a negative impact on market competitiveness,
but also had a significant negative impact on consumers/viewers as a result of their actions.
Specifically, Section 3(3)(b), which deals with anti-competitive agreements or practises that
restrict or regulate output, would be violated by the claimed behaviour. He went on to allege that
the defendant intended to monopolise the film business in order to prevent new competitors from
entering the market, and that as a result, the informant incurred a significant financial loss. This
led to the allegations that the defendant had broken Section 4 of the Act by restricting or banning
the Telugu film industry from distributing films in the country.

The CCI came to the conclusion that "what the Act envisions under Section 4 is the abuse of
dominant position by a business or a group rather than the misuse of a dominating position of
collective domination by more than one entity," according to the court. Furthermore, it noted that
no proof of cartelization could be found in the particular instance, and that the idea of collective
dominance is still not recognised by Indian competition law as of this writing. As a result, it was
determined that the defendants did not commit any violations of Sections 3 and 4 of the Act.

When it came to the practise of charging standard penalties on prepayments of mortgage loans,
the CCI ruled in Niraj Malhotra v. Deutsche Post Bank Home Finance11 that some banks and
non-banking financial institutions had abused their power. Section 4 was deemed to be
inapplicable since none of the banks or financial institutions "individually" possessed a
dominating position, according to the court. This case once again demonstrated the need to
include recognition of collective domination in the Act.

11
(Case 5/2009)
As a result of the absence of the notion of collective dominance in the Act, the CCI was unable
to sanction the parties in Sanjeev Rao v. Andhra Pradesh Hire Purchase Association 12, where
abuse of dominance was charged against AP Hire Purchase Association and its 162 members. It
was stated that members who controlled 60 percent of the market were charging exorbitant
interest rates to customers. But because the Act does not recognise collective abuse of power, the
parties were not subjected to a civil or criminal penalty. In the case of Shri Sonam Sharma v.
Apple, Vodafone, and Airtel13, the CCI failed to identify collective dominance for the second
time. The case of Meru-Ola-Uber, in which Meru argued that Ola had abused its dominant
position in the Bengaluru taxi industry, served as a reminder of the importance of collective
dominance being acknowledged. The CCI decided that Ola could not be considered dominant
individually since Uber was also a prominent competitor in the market, and that the present
legislation does not recognise collective supremacy in the transportation industry as a whole.

In India, there are several impediments to the acknowledgment of collective domination.

The Competition (Amendment) Bill, 2012 (the Bill) attempted to extend the scope of Section 4
of the Competition Act. As part of its effort to address situations in which parties hold collective
market dominance, the Bill proposed that the words "jointly or singularly" be placed
immediately after the words "or group" in Section 4(1) of the Act. Unfortunately, the Bill was
unable to make it through the legislative process and become law.

The Competition Law Review Committee ("Committee") put up a flimsy case in support of the
inclusion of collective dominance in Indian competition law. It was suggested that situations of
collective dominance or joint dominance are characterised by an anti-competitive agreement
among the participants in the game. At this point, the Committee believes that it is unnecessary
to add the idea since Section 3 of the Competition Act, 2002 is enough for dealing with such
situations. Because of the examples discussed in the preceding section, Section 3 has proven
insufficient for dealing with issues involving collective domination in the legal system. In this
study, figures from the United Kingdom ("UK") are used; nevertheless, it should be noted that
Indian law is founded on the British common law system. Although Section 60 of the

12
Case No. 49/2012
13
RNI MAHMUL/2011/38595
Competition Act, 1998 states that there should be uniformity between EU and home legislation,
this is not the case in the United Kingdom. Despite the fact that the informant was unable to
establish the defendants' collective dominance in the relevant market in Brannigan v. OFT, the
Competition Appeal Tribunal ("CAT") found that the notion of collective dominance existed
under the UK Competition law.

The Committee made one more compelling point that drew the audience's attention. Even though
the notion of collective dominance is well-established in the European Union (EU) and the
Canadian Competition Tribunal, nations such as the United States of America ("USA") and
Australia have yet to adopt the concept as their own. In the current environment, we must
recognise that the Indian market is in a different state from the markets in the United States and
Australia. India's competition framework is still in its infancy, with only a few regulations in
place. The competition regimes in the United States and Australia, on the other hand, are rather
mature. In contrast to India, which has a single competition agency with authority derived from a
single piece of law, the United States has a plethora of agencies and regulations to control
competition in the market. I think it would be wrong to pass up the chance of incorporating a
notion that is critical to the continuation of healthy competition.

Conclusion
As has been demonstrated in a number of instances, India's competition legislation currently
does not have any provisions to deal with collective dominance. It was anticipated that the idea
would be included in the Competition (Amendment) Bill, 2020, however no mention of the
concept could be located in the Bill. The difficulty arises because the articles of cartel and
horizontal agreements state that in order to establish an anti-competitive agreement, the parties
must come to an agreement in writing between themselves. When collective dominance becomes
a reality, this will be the void that will need to be bridged. There are two possible ways in which
this concept can be assimilated into the Indian Competition regime. The first is to amend the
explanation (a) to Section 4 from "dominant position means a position of strength, enjoyed by an
enterprise..." to "dominant position means a position of strength, enjoyed by an enterprise or
jointly by a number of enterprises...". The second is to amend the explanation (b) to Section 4
from "dominant position means a position of strength,enjoyed by an enterprise..." to "dominant
position means a position of strength, enjoyed by an enterprise or jointly by a number of
enterprises…” According to the Competition (Amendment) Bill 2012, the other way to
incorporate this concept is to change Section 4 from "No enterprise or group shall abuse its
dominant position" to "No enterprise or group "jointly or singly" shall abuse its dominant
position," as proposed by the Competition Commission. The incorporation of this notion within
the Act becomes important in order for the CCI to be able to take harsh steps in order to avoid
the misuse of collective dominance when adequate proof is shown to them. When there is no
legal acknowledgment of collective dominance, there is less competition in the market, which is
counterproductive to the entire objective of the Competition Act, 2002, which is harmful for a
rising economy like India. This year is significant for the closure of cases by the CCI, as well as
for the discovery of contraventions within the framework of Section 4 of the Act, among other
things. All of the CCI's cases involving major and well-funded firms such as Reliance Jio,
WhatsApp, and Ola Cabs have been resolved in favour of the companies involved.

“We are awaiting some key judicial pronouncements in cases pending before the Supreme Court
and the High Court that will decide and resolve the applicable law, despite the fact that no
changes to legislation or other actions are likely to have an influence on this area in the near
future. These include the Schott Glass price discrimination case, which is currently on appeal
before the Supreme Court, as well as the merits-based appeals by Coal India regarding unfair
terms and conditions, which are currently before the Supreme Court, as well as the underlying
compensation application before the NCLAT. Currently, the Auto Parts case is pending before
the Supreme Court on the merits, where it challenges the denial of market access to spare parts
and repair services, and it is also pending before the High Courts of Delhi and Chennai, where it
challenges the constitutional and jurisdictional validity of the decision.”

As a result of the rising use of abuse of dominant position, our implementation of statutory
provisions pertaining to the Competition Act has become increasingly important as well. One of
the primary goals of such legislation is to maintain the independence of business while also
allowing for a non-stigmatized economic viewpoint that is not influenced by the dominating
position of any other entity in the economy. As a result, in the market, there should be equal
opportunity and equal opportunity for all those who choose to engage in commercial activities.
Competition, on the other hand, should be encouraged as long as it is healthy and contributes to
the overall development of society; nevertheless, it becomes dangerous when one company
begins to dominate the other in terms of its own business practises.