CA -2

ABUSE OF DOMINANT POSITION

COMPETITION LAW

SUBMITTED BY – CHAITANYA

REGISTRATION NO. – 11715553

SECTION – L1701

COURSE CODE – LAW 502

SUBMITTED TO – Dr. GEETA

 INTRODUCTION

 The Competition Act, 2002 focuses to sustain competition, protect the hobbies of the
customers and make sure freedom of change in markets in India. It enables a
wholesome competitive subculture that inspires the enterprise to be fair, aggressive
and modern. This complements purchaser welfare and helps economic increase. In
simple terms ‘dominant position’ method something in a superior role in comparison
to others based on a few factors. This concept of dominance became, however,
standard in the Indian society itself, in which one “caste” was taken into consideration
to be advanced to others. However, staying in a better-off role doesn’t damage each
person, unless an man or woman is exploiting such energy. Therefore, having a
dominant function can't be considered bad in step with se. However, abusing this kind
of position based on its superiority is taken into consideration insufficient.

 There are five kinds of abusive use of dominant position in regard to the section 4(2)
of the Competition Act1 –

1. Unfair or biased trade practices: According to this, abuse of dominant role

occurs while an assignment or collecting legitimately or in an oblique way
forces prejudicial conditions at the sale of goods or rendering of expenses or
price in deal or acquisition of ruthless price of products or administrations.

2. Limiting advent or specialized or medical improvement: An abuse of

dominant function takes place inside the market where an enterprise or
organization legitimately or in an oblique manner forces situations that restrict
the introduction of the products or specialized or logical development bringing
approximately the introduction of the goods or administrations.

3. Denial of get entry to showcase, barriers to entry and development: Any

condition that makes forswearing get entry to the marketplace in any way will
comprise an abuse of the dominant position.

4. The imposition of beneficial commitments: whilst an undertaking makes the

finish of agreements difficulty to an acknowledgment of tremendous
commitments by means of one of a kind events and those commitments are to
such a quantity that with the aid of their very nature or as in line with

1
Available at https://www.legalserviceindia.com/legal/article-3928-abuse-of-dominance-
under-competition-act. Last Visited on 21/11/2021
 enterprise use in that discipline, they haven't any association with the subject
of the agreement.

5. Protection of various markets–whilst an agency utilizes its situation in a

tremendous market to enter every other marketplace, at that factor there is an
abuse of dominant function.

FACTORS TO DETERMINE DOMINANT POSITION2

 Dominance has been historically defined in phrases of marketplace proportion of the

organisation or institution of companies concerned. However, some of other elements
play a position in figuring out the impact of an agency or a set of enterprises in the
marketplace. These encompass:
 marketplace proportion,
 the scale and resources of the company
 size and significance of competition
 monetary energy of the corporation
 vertical integration
 dependence of purchasers on the agency
 quantity of access and go out limitations inside the marketplace; countervailing
buying power
 market structure and length of the market
 source of dominant role viz. Whether or not obtained due to statute and so forth.;
 social costs and responsibilities and contribution of enterprise playing dominant role
to monetary improvement.

SPECIFIC FORMS OF ABUSE3

REBATE SCHEMES

 The Competition Act 2002 (the Act) does not specifically cover discounts and rebate
schemes. However, rebate schemes may be looked at from the perspective of unfair or
discriminatory prices and conditions, or other exclusionary practices (eg, that limit or
control production of goods and supply of services or are practices that result in the
denial of market access), and, therefore, may be covered under the Act.
 In the Intel case (2014), the Competition Commission of India (the CCI) found that
Intel’s incentive and target schemes did not foreclose competitors, and that this was
2
Available at https://blog.ipleaders.in/abuse-dominant-position-competition-act-2002/ Last
visited on 20/11/2021
3
Available at https://www.mondaq.com/india/antitrust-eu-competition-/668306/abuse-of-
dominant-position-an-anti8208competitive-practice Last visited on 20/11/2021
 reflected in the distribution of competing microprocessors by Intel’s distributors and
OEMs. The complainant’s allegation that distributors were restricted from dealing in
competing products was found to be unsubstantiated. Further, the CCI observed that
Intel’s incentive schemes were targeted at increasing sales of low-demand products
and offered non-predatory discounts to meet competition, all of which were found to
constitute reasonable business practices.

TYING AND BUNDLING

 Unilateral tying and leveraging are considered abusive under section 4(2)(d) and
section 4(2)(e) of the Act. In Sonam Sharma v Apple (2013), the CCI set out the
conditions for prohibited tie-in arrangements under section 3(4) of the Act (which
deals with anticompetitive vertical agreements, but has some bearing on tying under
section 4):

 the presence of two separate products or services capable of being tied. The purchase
of a commodity must be conditioned upon the purchase of another commodity;
 the seller must have sufficient economic power with respect to the tying product to
appreciably restrain free competition in the market for the tied product; and
 the tying arrangement must affect a ‘not insubstantial’ amount of commerce: a tie-in
arrangement is only considered to be abusive if a ‘substantial’ portion of the market is
affected.
 
 The Competition Appellate Tribunal (the COMPAT) in the Schott Glass appeal (2014) held
that, for an abusive tie-in arrangement under section 4(2)(d) of the Act to be made out, the
tied product and tying product must be entirely different and have no connection to each
other in their application. The CCI in Khemsons Agencies v Mondelez India Foods Private
Limited (2018) held that, given that the coolers to store chocolates were provided free of cost
on a voluntary basis, there was no tying of coolers with the sale of chocolates.

EXCLUSIVE DEALING
 Exclusive dealing, non-compete provisions and single branding restrictions could
constitute abuses of dominant position, as they would all be characterised as practices
that result in the denial of market access as covered by section 4(2)(c) or limiting
production or technical development as covered by section 4(2)(b). The CCI is
increasingly analysing the foreclosure effect of such conduct as a requirement under
section 4 of the Act.
 DOMINANT POSITION OF FACEBOOK, GOOGLE, APPLE AND AMAZON4

AMAZON

 "Amazon is the dominant online marketplace" and that evidence "demonstrates

that Amazon functions as a gatekeeper for ecommerce."
 Investigators detail Amazon's difficult relationship with other sellers on the
platform, which it says "live in fear of the company" and which Amazon refers to
as "internal competitors."
 It describes sellers as "exploited" by the company's dominance: not allowed to
contact shoppers directly, often limited in their ability to sell on other platforms,
facing "strong-arm tactics in negotiations" and receiving either "atrocious levels of
customer service" or better service for a fee.
 The authors also write that Amazon profits off ideas and products developed by
others, whether that's sellers on its platform, startups it considers buying or even
open-source cloud-software developers.

APPLE

 The report says Apple exerts "monopoly power" in the mobile app store market by
favouring its own apps and disadvantaging rivals.
 That dominance hurts innovation and increases prices and choices for consumers,
House investigators found.
 Apple, along with Google in its Google Play store, leaves developers with little
choice for reaching consumers, the report says, adding that the arrangement leaves
developers at the whims of the "arbitrary" enforcement of Apple's app guidelines.
 The report found that the controversial 30% commission levied by Apple and
Google has resulted in price increases on consumers. Investigators say that Apple
generated billions of dollars in profit from the fees, despite costing about less than
$100 million to operate.

FACEBOOK

 The report quotes Facebook's own chief executive, Mark Zuckerberg, and other top
management describing the company's strategy of buying its rivals. In one internal
communication, Zuckerberg said Facebook "can likely always just buy any
competitive startups."
 Facebook used data to identify possible rivals and "then acquire, copy, or kill these
firms," the report says. Facebook's monopoly power "is firmly entrenched and
unlikely to be eroded by competitive pressure," investigators found.
 The report said recent internal documents show that Facebook is now more worried
about competition between its own products — like its photo-sharing app Instagram
and its original namesake network — than outside rivals.

4
Available at https://www.lexology.com/library/detail.aspx?g=00e0f87a-ff41-4ba2-a6ff-
5a026e7793b0 Last Visited on 20/11/2021
  Investigators conclude that because it has so little competition, Facebook has
"deteriorated" in quality, harming its users' privacy and leading to a "dramatic rise in
misinformation."

GOOGLE

 The report says Google enjoys a monopoly in search and search advertising, and its
dominance is protected by its own data and deals it has struck around the world to be
the default search engine in many browsers and devices. "No alternative search engine
serves as a substitute," investigators said.
 Google has maintained its dominant position by undermining search competitors and
favouring its own content in search results, the report says.
 The report also calls out how all the data Google collects on its users and competitors
reinforces its dominance and allows it to make even more money from ads.
 "Through linking these services together, Google increasingly functions as an
ecosystem of interlocking monopolies.

INDIAN APPROACH TO TACKLE THE MARKET GIANTS5

 It is subsisting Indian approach to manipulate huge-tech groups’ mergers is just like

the ex-ante link-up evaluate of some other organization. Essentially, there's no
variance within the way generation businesses are analysed. The linking-up
institutions, who stumble upon the specified gateway, are important to tell the
Competition of India (‘CCI’) beneath Section- 5 and 6 of the Competition Act, 2002.
Upon such notice, the CCI examines the merger primarily based on the elements
placed down in Section 20(4) of the Act. The subsisting parameters to evaluate
supremacy and ability anti-competitive effects aren't enough for the antitrust
regulators with a view to successively adjust massive-tech groups. These parameters
are interpreted in mild of commonplace enterprise which does now not make them
worth to adjust huge-tech corporations awaiting information dominance.

 These customary elements of association evaluate do not reflect on consideration on

the abnormality of anti-competitive consequences which is probably a effect of facts
imputations of big-tech groups. Hence, it is apparent that the cutting-edge opposition
regulation authorities in India do now not have a powerful mechanism in vicinity to
choose feasible anti-competitive upshots of mergers in the combination at hand. It
turns into difficult to gauge the capacity information dominance of huge-tech
businesses within the number one stages of a organisation when it isn't presiding in its
admissible market. Approximately, the opposition law regime insufficiencies certain
provisions to manipulate large-tech corporations.

5
Available at https://www.xda-developers.com/us-subcommittee-antitrust-report-amazon-apple-facebook-
google-abuse-monopoly-dominant-position-marke Last Visited on 21/11/2021
 CASE LAWS

 In Dhanraj PILLAY AND Ors v Hockey India, the CCI held that the Act was not
violated where allegedly contractual restrictions were not disproportionate to a
sporting organisation legitimate regulatory goal.
 In Faridabad Industries Association v Adani Gas Limited, the CCI held by the court
that a restriction was imposed by a dominant enterprise which may not be abusive if it
subject to a same restriction by a third party.
 Shamsher Kataria vs Honda Seil cars India Ltd. and, also Atos worldline vs Verifone
India, where the overarching parties were mentioned to stop it from getting a charge
out of activities that had been viewed as in invalidation of Section 4. Impose
disciplines of up to 10% of the ordinary of the turnover for the last three preceding
financial year.
 Excel crop care ltd vs competition commission of India, COMPAT held that
punishments are to be determined based on the ‘significant turnover’.  So, for a
situation of maltreatment against a multi-item organization, the turnover used to
compute the punishment would be the turnover from the specific product(s) in conflict
and not the general turnover.

CONCLUSION

 With the growing use of abuse of dominant role, our implementation of statutory legal
guidelines referring to the Competition Act also became relevant. The motive in the
back of any such regulation is to make certain the independence of business and
additionally to have an unstigmatized economic outlook without any fear of the
dominant position of another within the economy. Therefore, within the marketplace,
there should be a same opportunity and identical possibility to all who need to do the
enterprise. However, opposition must be successful so long as it is healthy and as long
because it enables the complete society to grow but it will become disastrous when
one begins to overpower the opposite in their personal ways of enterprise.