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AN ANALYSIS OF SECTION 4

COMPETITION LAW, PROJECT

STUDENT NAME: DIVIJA PIDUGU

ROLL NUMBER: 18LLB064

SECTION A

SEMESTER VIII

FACULTY NAME: Prof. R. Bharat Kumar

DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM

March, 2022
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Acknowledgement
I would sincerely like to put forward my heartfelt appreciation to our respected Competition Law
professor, R.Bharat Kumar for giving me a golden opportunity to take up this project regarding
“An analysis of Section 4”. I have tried my best to collect information about the project in
various possible ways to depict the clear picture about the given project topic.
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Contents
Acknowledgement...........................................................................................................................2
Introduction......................................................................................................................................3
DLF limited vs Competition Commission of India.........................................................................4
Samir Agrawal vs. Competition Commission of India and Ors......................................................6
Competition Commission of India vs. Bharti Airtel Limited and Ors............................................7
Belaire owner’s assoviation v. Dlf ltd...........................................................................................11
Pankaj Agarwal v. DLF Gurgaon Home Developers Pvt. Ltd......................................................13
Shamsher Kataria vs. Honda Siel Cars India Ltd.........................................................................16
Neeraj Malhotra vs. North Delhi Power Limited and Ors............................................................19
Maharashtra State Power Generation Company Ltd. and Ors. vs. Mahanadi Coalfields Ltd. and
Ors..................................................................................................................................................22
The National Stock Exchange of India Ltd. vs. Competition Commission of India.....................24
Dhanraj Pillay and Ors. vs. Hockey India....................................................................................26
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Introduction
Abuse is expressed to happen when an undertaking or a group of endeavors uses its prevailing
situation in the significant market in an exclusionary or/and in an exploitative way. The Act
gives a comprehensive list of practices that will comprise abuse of a dominant position and, in
which circumstances these are disallowed. Such practices will establish misuse just when
received by an endeavor getting a charge out of a prevailing situation in the pertinent market in
India. Abuse of dominant position is decided as far as the predefined sorts of acts committed by a
prevailing undertaking. Such acts are precluded under the law. Any abuse of dominant position
indicated in the Act by a prevailing firm will stand denied.

As per explanation affixed to Section 4 of the Competition Act, 2002 dominant position implies
the quality of an endeavor in the significant market in India which empowers the enterprise to
work autonomously of serious powers winning in the market and to influence the customers or
contenders or the market in support of it.

DLF limited vs Competition Commission of India1

Facts:

DLF announced the launch of Group Housing Complexes, known as The Belaire, Park Place and
Magnolia upon which the informants booked the apartments and entered into the Apartment
Buyer’s Agreements (‘ABA’). Also, by that time informants had already paid substantial amount
as they hardly had any option but to adhere to the dictates of DLF.

The DLF unilaterally without intimating the informants modified the original scheme. Therefore,
the DLF increased the number of apartments by 53% combining all the three projects of Belaire,
Park Place and Magnolia.

Consequently, on the grounds of the construction being abnormally delayed and substantial
compression of the common areas and facilities originally earmarked for each apartment, a
complaint was filed by the Informants against DLF, Haryana Urban Development Authority and
Department of Town and Country Planning, State of Haryana under Section 19 (1)(a) of the Act.

1
2014 Comp LR 1 (CompAT).
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The Informant alleged in the complaint that DLF, by abusing its dominant position, had imposed
highly arbitrary, unfair and unreasonable conditions on the Informant.

The CCI on the basis of DG’s in-depth investigation held that the Act is applicable in the instant
case. It delineated the relevant market on the basis of services provided by developers for
construction of ‘high end buildings’ in Gurgaon. The CCI analysed the dominant position of
DLF by placing reliance on each of the factors as mentioned in Section 19 (4) of the Act and
held DLF to be abusing its dominant position under Section 4(2)(a).

Issue

Whether DLF is occupying a dominant position in the above relevant market?

If yes, whether DLF has abused its dominant position in the relevant market?

Reasoning

CCI ordered that DLF ltd. is a dominant player in the relevant market determined above. The
DLF appealed against this order on following counts:

 There being intense competition in the market, none of the market players are in a
dominant position.

 It does not enjoy ‘position of strength’ in the relevant market, there is no entry barriers as
number of new developers has entered into the market, and also there is no question of
countervailing buying power.

 The DG’s conclusion on the market share was derived through a faulty ‘All India Sales
Figure’ as a large number of real estate companies were not considered and no reliable
analysis of market share could have been made on basis of sales figure alone.

COMPAT do not find any error in the consideration given by the CCI about the dominance of
the DLF in the market. It affirmed CCI’s order that DLF had the highest market share (45%),
vis-à-vis the market share of the nearest competitor (19%) which was more than twice of its
competitor, leading to hardly any competitive constraints. Further, DLF had a clear early
mover’s advantage and occupies a leadership position as real estate is a sector with natural entry
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barriers due to high cost of land and brand value of incumbent market leaders. The CCI while
analysing several factors held that DLF due to its level of vertical integration, presence in real
estate sector and financial strength was way ahead of its competitors. The market having low
level of concentration, DLF faced negligible threat from its rivals and enjoys sufficient ‘position
of strength’ in the market. Therefore COMPAT held that the DLF was a dominant player in the
relevant market.

Conclusion

This judgment will restore the balance between the real estate developers and property buyers. It
has although imposed a lot of penalty upon the realty developer DLF of INR 6,300 million, but
we can see there is no individualistic remedy provided to the ultimate consumers i.e. apartment
allottees of Belaire, Park Place and Magnolia. The tribunal refused to modify the ABA clauses as
they were outside the jurisdiction of Competition Act because of its execution before May 20,
2009. Further there is no provision of compensation to the customers under the Competition Act
which is a big lacuna of the Act.

The DLF has however announced that it will move the Supreme Court under Section 53T of the
Act against this judgment of COMPAT.

Samir Agrawal vs. Competition Commission of India and Ors.2

Facts

The appellant/informant was an independent practitioner of law and a consumer of the services

provided by the respondent aggregators, by means of an application addressed to the
Competition Commission of India, urging it to look into the alleged anti-competitive practices of
two cab service providing platforms- ANI Technologies Pvt Ltd along with Uber India Systems
Pvt Ltd, Uber B.V. and Uber Technologies Inc.- popularly known as Ola and Uber respectively;
claiming that the pricing algorithms applied by the respondent parties for calculating the cab
fares curtail the liberty of the said cab drivers to compete amongst each other, thereby
contravening the provisions of the Competition Act, 2002.
2
AIR 2021 SC 199
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Upon request for an inquiry into the said allegations before the Competition Commission of
India, and subsequent appeals to the authorities established by the Competition Act, 2000, it was
ascertained by the authorities that no such foul play between the aggregators was detected, and
hence the all-anti-competitive charges against Ola and Uber were dismissed; resulting in an
appeal to the Supreme Court in December 2020; wherein the matter was decided by a three-
judge bench of the Supreme Court.

Issue

Whether there is abuse of dominant position?

Reasoning

given the context of the Act in which the CCI and the NCLAT deal with practices which have an
adverse effect on competition in derogation of the interest of consumers, it was clear that the Act
vests powers in the CCI and enables it to act in rem, in public interest. This would make it clear
that a person aggrieved must, in the context of the Act, be understood widely and not be
constructed narrowly, as was done in Adi Pherozshah Gandhi. Further, it was not without
significance that the expressions used in Sections 53B and 53T of the Act were any person,
thereby signifying that all persons who bring to the CCI information of practices that were
contrary to the provisions of the Act, could be said to be aggrieved by an adverse order of the
CCI in case it refuses to act upon the information supplied. By way of contrast, Section 53N(3)
speaks of making payment to an applicant as compensation for the loss or damage caused to the
applicant as a result of any contravention of the provisions of Chapter II of the Act, having been
committed by an enterprise. By this Sub-section, clearly, therefore, any person who makes an
application for compensation, under Sub-section (1) of Section 53N of the Act, would refer only
to persons who have suffered loss or damage, thereby, qualifying the expression any person as
being a person who had suffered loss or damage. Thus, the preliminary objections against the
Informant/Appellant filing Information before the CCI and filing an appeal before the NCLAT
were rejected.

The concurrent findings of fact of the CCI and the NCLAT, wherein it had been found that
alleged companies did not facilitate cartelization or anti-competitive practices between drivers,
who were independent individuals, who act independently of each other, so as to attract the
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application of Section 3 of the Act, as had been held by both the CCI and the NCLAT.
Therefore, there was no reason to interfere with these findings.

Conclusion

The whole object of reservation is to see that backward classes of citizens move forward so that
they march hand in hand with other citizens of India on an equal basis. This will not be possible
if only the creamy layer within that class bag all the coveted jobs in the public sector and
perpetuate themselves, leaving the rest of the class as backward as they always were.

Competition Commission of India vs. Bharti Airtel Limited and Ors.3

Facts

Reliance Jio Infocomm Limited ('RJIL') had filed information under Section 19(1) of
Competition Act, 2002 before Competition Commission of India ('CCI') alleging anticompetitive
agreement/cartel having been formed by three major telecom operators, namely, Bharti Airtel
Limited, Vodafone India Limited and Idea Cellular Limited (Incumbent Dominant Operators)
('IDOs'). Apart from IDOs, certain allegations were also made against Cellular Operators
Association of India ('COAI'). CCI issued notice to these parties and after hearing RJIL,
aforesaid cellular companies and COAI, it passed a common order dated April 21, 2017 in all
these cases (by clubbing them together) holding a view that, prima facie case existed and an
investigation was warranted into matter. It, accordingly, directed Director General to cause
investigation in case. Four writ petitions came to be filed by Bharti Airtel Limited, Vodafone
India Limited, Idea Cellular Limited and COAI respectively. prayed for quashing of aforesaid
order and consequential action/proceedings on ground that CCI did not have any jurisdiction to
deal with such a matter. Matter was heard and vide judgment dated September 21, 2017, High
Court had allowed these writ petitions and quashed/set aside order dated April 21, 2017 passed
by CCI and consequently notices issued by Director General of CCI had also been quashed.
Bombay High Court in impugned judgment held that, Competition Commission of India (CCI)
had no jurisdiction in view of Telecom Regulatory Authority of India Act, 1997 and authorities
and Regulations made thereunder; CCI could exercise jurisdiction only after proceedings under
TRAI Act had concluded/attained finality; Order dated 21st April, 2017 passed under Section
3
AIR 2019 SC 113
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26(1) of Competition Act was not an administrative direction, but rather a quasi judicial one that
finally decided rights of parties and caused serious adverse consequences, because a detailed
hearing had been given and many materials had been tendered in courts of hearings; On merits of
matter, there was no cartelisation as alleged and COAI was exonerated; and Order of CCI was
perverse and liable to be interfered with under writ jurisdiction.

Issue

Whether writ petitions filed before High Court of Bombay were maintainable?

Whether there is abuse of dominance?

Reasoning

High Court was right in concluding that till jurisdictional issues were straightened and answered
by TRAI which would bring on record findings on aforesaid aspects, CCI was ill-equipped to
proceed in matter. Having regard to aforesaid nature of jurisdiction conferred upon an expert
regulator pertaining to this specific sector, High Court was right in concluding that concepts of
"subscriber", "test period", "reasonable demand", "test phase and commercial phase rights and
obligations", "reciprocal obligations of service providers" or "breaches of any contract and/or
practice", arising out of TRAI Act and policy so declared, were matters within jurisdiction of
Authority/TDSAT under TRAI Act only.

CCI was specifically entrusted with duties and functions, and in process empowered as well, to
deal with aforesaid three kinds of anti-competitive practices. Purpose was to eliminate such
practices which were having adverse effect on competition, to promote and sustain competition
and to protect interest of consumers and ensure freedom of trade, carried on by other
participants, in India. To this extent, function that was assigned to CCI was distinct from
function of TRAI under TRAI Act. Learned Counsel for Appellants were right in their
submission that CCI was supposed to find out as to whether IDOs were acting in concert and
colluding, thereby forming a cartel, with intention to block or hinder entry of RJIL in market in
violation of Section 3(3)(b) of Competition Act. Also, whether there was an anti-competitive
agreement between IDOs, using platform of COAI. CCI, therefore, was to determine whether
conduct of parties was unilateral or it was a collective action based on an agreement. Agreement
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between parties, if it was there, was pivotal to issue. Such an exercise had to be necessarily
undertaken by CCI. In Haridas Exports, this Court held that where statutes operate in different
fields and had different purposes, it could not be said that there was an implied repeal of one by
other. Competition Act was also a special statute which deals with anti-competition. If activity
undertaken by some persons was anti-competitive and offended Section 3 of Competition Act,
consequences thereof were provided in Competition Act.

All aforesaid functions not only come within domain of CCI, TRAI was not at all equipped to
deal with same. Even if TRAI also returned a finding that a particular activity was anti-
competitive, its powers would be limited to action that could be taken under TRAI Act alone. It
was only CCI which was empowered to deal with same anti-competitive act from lens of
Competition Act. If such activities offend provisions of Competition Act as well, consequences
under that Act would also follow. Therefore, contention of IDOs that jurisdiction of CCI stand
totally ousted could not be accepted. Insofar as nuanced exercise from stand point of
Competition Act was concerned, CCI was experienced body in conducting competition analysis.
Further, CCI was more likely to opt for structural remedies which would lead sector to evolve a
point where sufficient new entry was induced reby promoting genuine competition. This specific
and important role assigned to CCI could not be completely wished away and 'comity' between
sectoral regulator (i.e. TRAI) and market regulator (i.e. CCI) was to be maintained.

Since matter pertained to telecom sector which was specifically regulated by TRAI Act, balance
was maintained by permitting TRAI in first instance to deal with and decide jurisdictional
aspects which can be more competently handled by it. Once that exercise was done and there
were findings returned by TRAI which lead to prima facie conclusion that IDOs had indulged in
anti-competitive practices, CCI could be activated to investigate matter going by criteria laid
down in relevant provisions of Competition Act and take it to its logical conclusion. This
balanced approach in construing two Acts would take care of Section 60 of Competition Act as
well.

As per RJIL as well as CCI, High Court could not have entertained writ petition against an order
passed under Section 26(1) of Competition Act which was a pure administrative order and was
only a prima facie view expressed rein, and did not result in serious adverse consequences.
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Section 26, under its different Sub-sections, required Commission to issue various directions,
take decisions and pass orders, some of which were even appealable before Tribunal. Even if it
was a direction under any of provisions and not a decision, conclusion or order passed on merits
by Commission, it was expected that same would be supported by some reasoning. At stage of
forming a prima facie view, as required under Section 26(1) of Act, Commission might not really
record detailed reasons, but must express its mind in no uncertain terms that, it was of view that
prima facie case existed, requiring issuance of direction for investigation to Director General.
Such view should be recorded with reference to information furnished to Commission. Such
opinion should be formed on basis of records, including information furnished and reference
made to Commission under various provisions of Act. Commission was expected to express
prima facie view in terms of Section 26(1) of Act, without entering into any adjudicatory or
determinative process and by recording minimum reasons substantiating formation of such
opinion, while all its other orders and decisions should be well reasoned.

Such an approach could also be justified with reference to Regulation 20(4), which required
Director General to record, in his report, findings on each of allegations made by a party in
intimation or reference submitted to Commission and sent for investigation to Director General,
as case might be, together with all evidence and documents collected during investigation.
Inevitable consequence was that, Commission was similarly expected to write appropriate
reasons on every issue while passing an order under Sections 26 to 28 of Act.

Merely because present case dealt with telecom sector would not change nature of order that was
passed by CCI under Section 26(1) of Competition Act. However, it raised another dimension.
Even if order was administrative in nature, question raised before High Court in writ petitions
filed by Respondents touched upon very jurisdiction of CCI. As was evident, case set up by
Respondents was that CCI did not have jurisdiction to entertain any such request or Information
which was furnished by RJIL and two others. Question, thus, pertained to jurisdiction of CCI to
deal with such a matter and in process High Court was called upon to decide as to whether
jurisdiction of CCI was entirely excluded or to what extent CCI can exercise its jurisdiction in
these cases when matter could be dealt with by another regulator, namely, TRAI.

Conclusion
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High Court was competent to deal with and decide issues raised in exercise of its power under
Article 226 of Constitution. Writ petitions were, therefore, maintainable. Once it was held that,
order under Section 26(1) of Competition Act was administrative in nature and further that it was
merely a prima facie opinion directing Director General to carry investigation, High Court would
not be competent to adjudge validity of such an order on merits

Belaire owner’s assoviation v. Dlf ltd.4

Facts

DLF builders launched a housing complex, ‘Belaire’ which, as per initial plan consisted of 368
flats in total in 5 multi-storied residential building consisting 19 floors each to be constructed in
DLF City, Gurgaon. Payments schedule was linked to projected stage wise competition of the
project with some amount to be paid at the time of booking of the flat, 2 months after the
booking date and remaining as per scheduled stage wise competition of the project. The
advertisements of the builder also guaranteed additional facilities such as clubhouse gymnasium
etc., and ensured completion of the buildings within 36 months from the launch of the project.

When the construction began, 5 buildings itself were constructed, however each building’s floor
number increased from 19 to 29 leading to an increase in total number of flats from 368 to 564.
Additionally, the facilities ensured by the builders were compressed due to shortage of area and
the delivery of the apartments were delayed to the owners by 2 years, even though the apartment
owners made their payments well on time.

The Belaire Owner’s Association (BOA) filed a complaint against the DLF Ltd. with
Competition Commission of India (CCI) accusing them of abuse of dominant position by their
use of contracts with the apartment owners. The BOA alleged various clauses of the Apartment
Buyer’s Agreement (ABA) entered into with the developer on buying flats as arbitrary, unfair
and unreasonable.

CCI analyzed this information and held that prima facie case of abuse of dominance existed and
requested the Director General (DG) to conduct further investigation. DLF immediately
challenged the CCI’s jurisdiction but dropped the matter subsequently. The DG conducted an in-

4
2011 Comp LR 239 (CCI)
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depth investigation and discovered that the conditions imposed by DLF did violate certain
provisions of the Competition Act.

The CCI on the basis of DG’s in- depth investigation held that the Act is applicable in the instant
case. It delineated the real estate market on the basis of services provided by developers for
construction of high-end buildings in Gurgaon.

Issue

Whether DLF is occupying a dominant position in the above relevant market?

Reasoning

Sine DLF had the highest market share in the real estate sector of 45%, there were minimal
competitive constraints on DLF. Moreover, DLF had an early mover’s advantage in the real
estate sector which naturally had entry barriers due to high cost of land and brand value
incumbent market leaders. As per the DG’s report, CCI concluded that DLF was way ahead of its
competitors and faced almost no threat in the market due to low market concentration by virtue
of brand value and financial strength. Based on the above contentions, CCI ordered that DLF
was in fact a dominant player in the real estate market in India. DLF appealed against this order
on the counter that:

a) There being an intense competition, none of the market players are in ‘dominant’ position.

b) DLF doesn’t enjoy the position of strength in the relevant market, there are no entry barriers
into the market and also there is no question of countervailing buying power.

c) The DG’s conclusion on market share was derived through a faulty ‘All India Sales Figure’ as
large number of real estate companies were not considered and no reliable analysis of market
share can be made bases on sales figure alone.

Conclusion

COMPAT did not find any errors in the considerations given by CCI about the dominant position
of DLF Ltd. in the real estate market. In fact, COMPAT affirmed that DLF had a market share of
45% which was twice as compared to the market share of the nearest competitor which was 19%,
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leading to hardly having any competition constraints. It also held that DLF had an early mover’s
advantage and occupied a leadership position in the market with natural entry barriers such as
high cost of land and brand value of incumbent market leaders. The market having low-level of
concentration, DLF faced negligible level of threat from the competitors and enjoyed ‘position of
strength’ in the market. Therefore, it was established that DLF had a dominant position in the
real estate market.

Pankaj Agarwal v. DLF Gurgaon Home Developers Pvt. Ltd.5

Facts

The information in case bearing nos. 13 of 2010 & 21 of 2010 was filed under Section 19(1) (a)
of the Competition Act, 2002 by Mr. Pankaj Aggarwal and Mr. Sachin Aggarwal respectively
against DLF Gurgaon Home Developers Private Limited alleging, inter alia, contravention of the
provisions of Section 4 of the Act. As per the Informants, in March 2008, they were approached
by brokers/agents of DLF New Gurgaon Home Developers Private Limited for the launch of
Opposite Party’s new project under the name DLF New Town Heights. The Informants were
lured to book an apartment in the pre-launch scheme in the above said Project.

The Informants were allotted two apartments in the Project. The Opposite Party sent a two and
half year instalment payment plan to the Informants vide letters dated 01.05.2008 and
05.05.2008. The Opposite Party also made various demands on different dates but the Informants
did not make any payments as there was no sign of construction/development at the Project site.
Consequently, the Informants received first and second reminders in the month of October 2008
and the final notice in November, 2008. As per the information the Opposite Party was only
collecting huge amounts from allotees/buyers who had booked apartments with them and were
not starting the construction. Informants wrote letters to the Opposite Party for cancellation of
allotment and requesting for refund of amounts paid by them, but they were informed that
applications signed by buyers were irrevocable and the request for cancellation cannot be
processed. In February 2010, the Opposite Party intimated the Informants that foundation work
has been completed and Informants were required to make payments as per the plans. On the
basis of above allegations as well as imposition of unfair and onerous terms and conditions, the

5
Case Nos. 13 & 21 of 2010 and 55 of 2012
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Informants prayed before the Commission to initiate an inquiry into the alleged conduct of the
Opposite Party for abuse of dominant position in contravention of provisions of section 4(2)(a)(i)
of the Act. The information in Case No. 55 of 2012 was filed under Section 19(1)(a) of the Act
by Mr. Anil Kumar against the Opposite Party alleging, inter alia, contravention of the
provisions of Sections 4 of the Act. The Informant had booked an apartment bearing no. NGP
023 in New Town Heights, Sector 90, Gurgaon. The Informant alleged that Opposite Party
abused its dominant position by adopting practices like allotment of back to back parking on
compulsory payment of additional Rs. 1.5 lakhs, non-transparent calculation of advance payment
rebate, additional payments towards External Development Charges (EDC)/Infrastructure
Development Charges (IDC) on the increased area etc. After considering the facts and supporting
documents filed by the informants, the CCI, prima facie, was of the opinion that the OP abused
its dominant position in the real estate segment in Gurgaon. Accordingly, the CCI issued
direction under section 26(1) of the act to the Director General to investigate the matter.

Issue

Whether the Opposite Party has violated the provisions of section 4 of the Act?

Reasoning

As regards the first issue, the OP urged that the Commission has no jurisdiction in these cases as
the Buyers‘ Agreements under challenge were entered into prior to 20.05.2009 i.e. the period
when the relevant provisions of the Act, were not in force. The OP argued that the provision
contained under section 4 of the act, being prospective in nature cannot be invoked to scrutinize
the buyers’ agreement entered into between the parties before the date of enforcement of the
provision. The CCI opined that, it is fully cognizant of the legal position that the Act is not
retrospective but prospective in nature. However, that does not mean that the fact of execution of
an agreement prior to 20.05.2009 would immunize the conduct of the Opposite Party altogether
from the scrutiny of the Act. Looking at the broader spirit of the Act and the duty that has been
cast on the Commission by the legislature, it will be inappropriate to decide every case qua the
Informant only. The Informant is but one of the mediums through which the Commission
becomes aware of the distortion of competition or market irregularities. To say that the
investigation and analysis of the Commission should be restricted to the conduct of Opposite
 P a g e | 16

Party towards a particular Informant/consumer would hamper the very objective and spirit of the
Act. Hence, the CCI held that it has jurisdiction in the present matter. With regards to the second
issue, the CCI before determining the abuse of dominance by the OP, had to determine the
position of the OP with context to relevant market within which the OP is alleged to have abused
its position.

Conclusion

After perusing the present matter and in light of the facts and circumstances mentioned in the
matter, I am of the view that the Competition Commission of India has rightly concluded that the
opposite party has a dominant position in the relevant market and has also abused that
dominance. The same may be inferred from the detailed investigation conducted by the Director
General who examined all the facts and circumstances and held the OP guilty of the alleged
abuse which was confirmed by the commission. The buyer’s agreement of the OP is indeed one
sided and imposed unfair conditions on the buyers which clearly amounts to abuse.

Shamsher Kataria vs. Honda Siel Cars India Ltd.6

Facts

The present information has been filed by Shri Shamsher Kataria (hereinafter, referred to as the
"Informant") under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, referred to as the
"Act") against Honda Siel Cars India Ltd. (hereinafter, referred to as "Honda" or OP-1), the
Volkswagen India Pvt. Ltd. (hereinafter, referred to as "Volkswagen" or OP-2) and Fiat India
Automobiles Ltd. (hereinafter, referred to as "Fiat" or OP-3), alleging anti-competitive practices
on part of the OPs whereby the genuine spare parts of automobiles manufactured by OP-1, OP-2
and OP-3, respectively, are not made freely available in the open market. OP-1 to OP-3 are
involved in the business, inter alia, of manufacture, sale, distribution and servicing of passenger
motor vehicles in India. It has been averred that the Opposite Parties also
operate/authorize/regulate or otherwise control the operations of various authorized workshops
and service stations which are in the business of selling automobile spare parts, besides,
rendering after sale automobile maintenance services.

6
 2014 Comp LR 1 (CCI)
 P a g e | 17

The Informant has also alleged, that even the technological information, diagnostic tools and
software programs required to maintain, service and repair the technologically advanced
automobiles manufactured by each of the aforesaid OPs were not freely available to the
independent repair workshops. The repair, maintenance and servicing of such automobiles could
only be carried out at the workshops or service stations of the authorized dealers of OP.

The Informant has further alleged that the restriction on the availability of genuine spare parts
and the technical information/know-how required to effectively repair, maintain or service the
automobiles manufactured by the respective OPs is not a localized phenomenon. The OPs and
their respective dealers, as a matter of policy, refuse to supply genuine spare parts and
technological equipment for providing maintenance and repair services in the open market and in
the hands of the independent repairers. In support of his allegations, the Informant has submitted
letters from some independent service stations, where they have expressed their inability to
service the Informant's vehicle due to the lack of access of such independent repairers to genuine
spare parts and other technological information required to service/maintain the automobiles
manufactured by the respective OPs. It has been stated by the Informant that he earlier owned a
Maruti Suzuki vehicle and could easily get it repaired at independent workshops because the
spare parts and the technological tools required to repair and maintain a Maruti Suzuki vehicle
were freely made available by the company in the open market.

It has been further alleged that the OPs 1-3, by restricting the sale and supply of the genuine
spare parts, diagnostic tools/equipment, technical information required to maintain, service and
repair the automobiles manufactured by the respective OPs, have effectively created a monopoly
over the supply of such genuine spare parts and repair/maintenance services and, consequently,
have indirectly determined the prices of the spare parts and the repair and maintenance services.
Additionally, the Informant has alleged, that such restrictive practice carried out by the OPs in
conjunction with their respective authorized dealers, amounts to denial of market access to
independent repair workshops.

The Informant has stated that the cost of getting a car repaired in an independent workshop is
cheaper by 35-50% as compared to the authorized service centers of the OPs. The Informant has
alleged that the OPs charge arbitrary and high prices to the consumers who are forced to avail the
services of the authorized dealers of the OPs for repairing and maintaining their automobiles
 P a g e | 18

since the genuine spare parts, diagnostic tools and the technological information required to
service their cars are not made available by the OPs to independent repair workshops. It has been
also stated that the prices charged for the genuine spare parts and for repair and maintenance
services by the authorized dealers of the OPs are even higher than what they charge in other
markets in Europe. The Informant has alleged that such practices which allow the OPs to charge
arbitrary and high prices result in significant increase in the maintenance cost to car owners.

Issue

Whether there is any abuse of dominant position in relevant market by Opposite Parties?

Reasoning

In present case, independent service providers require spare parts and diagnostic tools
compatible to various models of automobiles manufactured by various OEMs to carry out their
economic activity of providing repair and maintenance services in Indian automobile
aftermarket. Each OEM is a dominant player in aftermarket for supply of spare parts and
diagnostic tools and through a network of contracts effectively controls supply of such spare
parts and diagnostic tools in aftermarket. Moreover OEMs through their own or related network
of authorized distributors also operated in aftermarket for aftersale repair and maintenance
services of their own brand of cars. Each OEM have two type of customers; one in primary
market and other in secondary market. These customers are: (a) car owners who purchase
automobiles manufactured by OEMs in primary market and (b) independent service providers in
aftermarket. An owner of a car cannot fit spare parts into machine by himself and requires
services of a specialized technician. Therefore, owner of automobiles does not operate in
aftermarket as purchasers of spare parts but require service of firms engaged in maintenance and
repair work. Further independent repairers, who were not part of official dealer network of
OEMs, did operate in market for as purchasers of spare parts of automobiles manufactured by
OEMs. Therefore, independent service providers were customers of OEMs in aftermarket and
further competed with OEMs in repairs and maintenance service aftermarket. Such practices
amount to denial of market access by OEMs under Section 4(2)(c) of Act. Further, such denial of
market access was specifically aimed at adopting a course of conduct with a view to exclude a
 P a g e | 19

competitor from market by means other than legitimate competition and such exclusionary
abusive conduct allowed OEMs to further strengthen their dominant position and abuse it. Also it
should be observed that Commission unlike Section 3(5) of Act, there was no exception to
Section 4(2) of Act. Therefore, if an enterprise was found to be dominant pursuant to explanation
(a) to Section 4(2) and indulged in practices that amounted to denial of market access to
customers in relevant market; it was no defense to suggest that such exclusionary conduct was
within scope of Intellectual Property Rights of OEMs. Therefore Commission was of opinion
that OEMs had denied market access to independent repairers and other multi brand service
providers in aftermarket without any commercial justification. Furthermore exploitative pricing
conduct by each OEM was a manifestation of lack of competitive structure of Indian automobile
market. Therefore structurally modifying competitive nature of Indian automobile market would
itself induce market self-correcting features, by enhancing consumer-choice and access of
independent repairers to effectively compete in Indian aftermarket. Such remedies, in opinion of
Commission shall have a rationalizing effect on prices of products in Indian automobile
aftermarket. Therefore, in most cases owners of various brands of automobiles were completely
dependent on authorized dealer network of OEMs and were not in a position to exercise option
of availing services of independent repairers. In most cases, users of car wanting to purchase
spare parts had to necessarily avail services of authorized dealers of OEM. Such OEMs used
their dominance in relevant market of supply of spare parts to protect other relevant market
namely; after sales service and maintenance thereby violating Section 4(2)(e) of Act. Even in
case of OEMs where spare parts were available to independent repairers as well as owners of
cars in open market, independent repairers were still foreclosed from aftermarket for repairs and
maintenance of various brands of automobiles manufactured by OEMs. This was because none
of OEMs allowed their diagnostic tools, repair manuals etc., to be sold in open market. It had
emerged from investigations of DG that with technological advancement in vehicle design and
increase in electronic and electrical features and controls, specialized diagnostic testers/scanning
equipment were required for diagnoses at time of car repair or service of most of cars of various
brands. Access to these specialized diagnostic tools, fault codes, technical manuals, training etc.
was critical for undertaking service and repair of such vehicles.

Conclusion
 P a g e | 20

Independent repairers were substantially handicapped from effectively attending to aftermarket

requirements of automobiles due to lack of access to specialized diagnostic tools. Hence conduct
of these OEMs amounted to violation of Section 4(2)(e) of Act in same manner as OEMs which
disallowed sale of spare parts over counter to independent repairers.

Neeraj Malhotra vs. North Delhi Power Limited and Ors.7

Facts

The informant has filed an information with the Commission on the matter of electricity supply
meters fixed mandatorily by the Distribution Companies in Delhi (North Delhi Power Co.
(NDPL); ii) BSES Rajdhani power Ltd; iii) BSES Yamuna Power Ltd.) interchangeably referred
to as Licensees, DISCOMs which are running fast and inflating the consumers electricity supply
and services charges. Consumers are not allowed to buy their own meters.

It has been submitted by the informant that as per report published by 'The Hindu' on 14.04.2005,
in terms of a meter testing drive undertaken by the enterprises engaged in supply and distribution
of electricity to the their consumers within the territory of Delhi in July-August 2004, only
around 93% of the meters checked were found to be working within the specified limit according
to statistics given by the Delhi Electricity Regulatory Commission (DERC). Another news item
appearing in 'Hindustan Times' dated 08.04.2008 a committee named as Electricity Consumer
Advocates Committee had noted that most meters tested by Central Power Research Institute of
Bangalore under the aegis of Public Grievance Cell, were found to be running fast. Similarly
news report appearing in 'The Hindu' on 09.04.2008 had brought forth the fact that the Power
Consumer Advocates Committee constituted by the Delhi Government in December, 2007 had
also found that the meters sent for testing to the Central Power Research Institute of Bangalore
were not conforming to the prescribed standards. The said report further mentioned that the
meters installed by the enterprises engaged in supply and distribution of electricity to their
consumers within the territory of Delhi were giving readings up to 2.5% faster as against the
0.50% margin allowed, in terms of the queries put up by committee headed by retired Delhi High
Court Judge Hon'ble Shri R.C. Chopra. That in another report/survey carried out by 'Times of
India' on 23.03.2009, it was reported that a Delhi Government Inspection Report had admitted

7
 MANU/CO/0026/2011
 P a g e | 21

and concluded that almost 90% of the electricity meters which were checked in the National
Capital Territory of Delhi were running 2.5% higher than the error margin limit and were thus
leading to overcharging of the consumers. The Hindustan Times vide its report published on
09.06.2008 had reported the fact that the High Court in its judgment had reported that digital
electricity meters with a error margin of more than 1% should be considered as faulty.

As per averments, the DISCOMs purchase and install the meters on their own and the consumers
are not allowed to procure and buy the meters of BIS Standard manufactured by any of the
manufacturer for installing the same. Allegedly almost 82% of the meters installed by the above
enterprises are found to be running on the plus side of 2.5% of the prescribed limit and hardly
any meter is running on the slower side i.e. the minus side of 2.5%.

The informant has alleged that DISCOMs are abusing their dominant position by imposing
unfair and discriminatory conditions in purchase of goods (i.e. electricity meters) and also
services, thereby leading to foreclosure of competition by hindering entry into the market.

Issue

Whether opposite parties are abusing the dominant position in the relevant market?

Reasoning

The competition act has clearly stated that the dominant position prima facie is not void, but no
enterprise is entitled to abuse its dominant position. [13] Thus, ‘it is not dominance, but its abuse,
which is prohibited in law. While Section 4 of the Act does not prohibit an enterprise from
holding a dominant position in a market, it does place a special responsibility on such
enterprises, in requiring them not to abuse their dominant position. As per Section 4(2) of the
Act, there shall be an abuse of dominant position, if an enterprise inter alia directly or indirectly,
imposes unfair or discriminatory conditions in purchase or sale of goods or services or indulges
in practice or practices resulting in denial of market access in any manner. However, the said
section does not contain an exhaustive list of the activities that would amount to a contravention
of its provisions. The actions, practices and conduct of an enterprise in a dominant position have
to be examined in view of the facts and circumstances of each case to determine whether or not
the same constitutes an abuse of dominance in terms of Section 4 of the Act. In this regard, it is
 P a g e | 22

relevant to quote the decision in the case of Kanal Ltd. v. Föreningen Svedska Tonsättares
Internationella Musikbyra8, where the Court (Fourth Chamber) observed that an undertaking in a
dominant position is entitled also to pursue its own interests. However, such an undertaking
engages in abusive conduct when it makes use of the opportunities arising out of its dominant
position in such a way as to reap trading benefits which it would not have reaped if there had
been normal and sufficiently effective competition.

Conclusion

it is found that the all three opposite parties have abused their dominant position in the relevant
market of distribution/ supply of electricity and the relevant market of distribution/ supply of
Consumer Meters by imposing unfair conditions on purchase/ sale of electricity and Consumer
Meters in contravention of Section 4(2)(a)(i) of the Act. It is also found that the opposite parties
by their acts in the relevant market of supply/ distribution of Consumer Meters have denied
access of this market to the other distributors/ vendors of the Consumer Meters and hence abused
their dominant position in above said market in contravention of Section 4(2)(c) of the Act.

Maharashtra State Power Generation Company Ltd. and Ors. vs. Mahanadi
Coalfields Ltd. and Ors.9
Facts

The information in this case was filed under section 19(1)(a) of the Competition Act, 2002 ('the
Act') by M/s. Maharashtra State Power Generation Company Ltd. (MAHAGENCO) against M/s.
Mahanadi Coalfields Limited (MCL) and M/s. Coal India Ltd. (CIL) alleging inter alia
contravention of the provisions of section 4 of the Act.

The informant appears to be aggrieved by the fact that MCL instead of signing/executing coal
supply agreements/fuel supply agreements as required under the Coal Distribution Policy, 2007
executed/signed MoUs which did not cover all aspects of supply and issues. Aspects like quality
control, grade failure, short supply, joint sampling etc., had not been detailed/enumerated in clear
terms and conditions. Further, it is the case of informant that it received a model Coal Supply
Agreement (CSA) proposed to be executed between it and MCL. It is alleged that the clauses of
8
(2009) 5 C.M.L.R. 18
9
 2013 Comp LR 910 (CCI)
 P a g e | 23

this agreement amongst others clearly demonstrated that the conditions of supply as proposed
were onerous and, as such, negated the purpose of securing firm supply of coal on the basis of a
contractual arrangement in terms of the new Coal Distribution Policy 2007 ('NCDP'). It is
alleged that the proposed CSA contained clauses which were burdensome and capable of causing
implementation issues imposing additional cost on MAHAGENCO leading to higher cost of
electricity which would be eventually passed on to consumers. It is further averred by the
informant that while the draft CSA was under negotiation, MCL sent a draft MoU to
MAHAGENCO which had to be executed simultaneously at the time of execution of CSA. It is
the case of the informant that the draft MoU attempted to further dilute the obligations of MCL
to supply coal under the proposed CSA.

Issue

Whether Opposite Parties/OPs i.e. Coal India Ltd (CIL) and its subsidiaries were in dominant
position?

Reasoning

Commission noted that although CIL and its subsidiaries were companies registered under
Companies Act, 1956 with their respective Board of Directors, all policy decisions were taken by
CIL Board and coal subsidiaries implemented decisions taken by CIL. In view of provisions of
Coal Mines (Nationalization) Act, 1973, dominant position of CIL was acquired as result of
policy of Government of India by creating a public sector undertaking and vesting ownership of
private mines in it. Thus, CIL and its subsidiaries have no competitive pressure in market and
there was no challenge at horizontal level against their market power. Further, market share of
CIL in financial year 2010-11 was 69% while market share in 2011-12 stood at 63%.
Commission observed that New Coal Distribution Policy 2007 (NCDP) like any other policy of
State for various sectors was formulated to regulate distribution of coal in India in view of
limited resources and dependency of various sectors on coal as primary source of fuel yet it did
not define or determined terms and conditions for supply, to curtail independence of CIL.
Moreover Commission concurred with finding of DG that CIL was at liberty to decide quantity
of coal, prices and terms in view of its commercial interest within outline provided in NCDP.
Commission also noted that although NCDP provides that 100% of normative requirement have
 P a g e | 24

to be supplied by coal companies but OPs have framed Fuel Supply Agreements (FSAs) in such
manner that they were eligible for incentives even if supplies were below Annual Contracted
Quantity (ACQ). Also, decisions relating to ACQ were taken only after considering feasibility of
production and constraints of CIL. In such circumstances, contention of CIL that it was not able
to operate independently in relevant market became futile. DG noted that CIL framed terms and
conditions of FSA to safeguard against any penalty for failure to supply contracted quantity. It
also noted that data provided showed that after implementation of FSA, CIL had not paid penalty
for failure to supply, whereas in 2011-12 it was able to earn about Rs.700 crores on account of
incentives for supplying coal above trigger level of ACQ. Further, even in relation to pricing of
coal, no material was placed to show that prices were not determined by Board of CIL. In fact,
fixing prices of different grades of coal, CIL Board acted without any interference of
Government of India (GoI) which ultimately resulted generation of higher sales revenue. Also
highlighted that NCDP laid limit of 10% for e-auction but OPs were allocated higher quantity for
e-auction in its commercial interest.

Conclusion

Thus, finding of DG that Opposite Parties/OP have greater flexibility and independence in
deciding prices of coal for unregulated sector, stood established. Hence, Commission concluded
that OPs were in dominant position as per Section 4 of Act.

The National Stock Exchange of India Ltd. vs. Competition Commission of

India10
Facts

An order passed by the majority Members of the Competition Commission of India (for short
'the CCI') holding Appellant-National Stock Exchange of India Ltd. (for short 'NSE') to be a
dominant player in the relevant market and further holding that it had abused its dominance
therein and on that count inflicting a penalty of Rs. 55.50 crores (@ 5% of the average turnover)
falls for consideration in this Appeal. The other order passed by the minority two Members
namely-Shri Anurag Goel and Dr. Geeta Gouri, however, exonerating the Appellant-NSE,

10
 2014 Comp LR 304 (CompAT)
 P a g e | 25

holding that there was no violation of Section 4 of the Competition Act, 2002 on the part of NSE
does not.

Information was led before the CCI at the instance of the respondent-MCX Stock Exchange Ltd.
('MCX-SX' for short) against the National Stock Exchange of India Ltd. (the appellant herein)
and DotEx International Ltd. ('DotEx' for short). The MCX-SX is now Respondent No. 2 in this
Appeal while DotEx has not been joined as a party to this Appeal.

Issue

Whether there is any abuse of its dominant position in relevant market by Appellant?

Reasoning

This Tribunal observed that in instant case average variable cost was claimed to be zero. This
situation could come only by first arriving at total variable cost being zero. Moreover there was
good evidence available to suggest that total variable cost could not be zero in order to justify
zero available variable cost. It was only when total variable cost was zero, then that zero cost
was divided by total output cost. Also it need not be explained that when zero was divided by
some figure, result had to be necessarily a zero. However such was certainly not a case here. This
situation could have come only and only, if total variable cost came to a zero. It had not been
shown by NSE that total variable cost in this case was a zero. Furthermore this Tribunal
generally agreed with finding of abuse of dominance given by D.G. as well as Commission.
Tribunal found no justification on part of NSE to continue with predatory pricing for unspecified
period. In common parlance, predatory pricing means pricing which is essentially below cost and
has an intent of destroying competition in market. Tribunal did not see any different meaning of
this term. Argument of concerned Counsel centered around point that this was an example of
unfairly low price. However Tribunal did not agree. Admittedly, finding of the majority order
passed by Commission was endorsed that these waivers too were anti-competitive in nature.
Therefore Tribunal was fully convinced that conduct on part of NSE in waiving various fees,
such as transaction fees, data feed fees, admission fees etc. was absolutely anti-competitive.
Moreover finding of majority order with respect to fact that this caused breach of Section 4(2) of
Act and was a classic example of abuse of dominating position by NSE. Furthermore order of
majority passed by Commission with respect to holding NSE guilty of breach of Section 4(2)(e)
 P a g e | 26

was incorrect. However it should be noted that it was not necessary for breach of Section 4(2)(e)
of Act to be dominant in second relevant market. It was enough, even if enterprise wished to use
its strength in market in which it was dominant to enter into or to protect other. In Tribunal's
opinion, if relevant market as held by Commission was only CD segment, then there could not be
any other market like non-CD segment. There was no necessity of putting all other segments in
one group and indeed it could not have been done, much less to hold it as another relevant
market. Logic of Commission on this question was flawed and same was rejected by Tribunal.

Conclusion

Therefore it could be held that NSE could not have been guilty of breach of Section 4(2)(e) of
Act, basically on logic that there was only one market and that market was services of stock
exchange. Merely because at relevant time period, services of stock exchange of MCX-SX were
limited to CD segment, it did not mean that relevant market had to be held as a CD segment
market. As a result finding of Commission on this issue was set aside.

Dhanraj Pillay and Ors. vs. Hockey India11

Facts

The case was initiated on the basis of information filed by Sh. Dhanraj Pillay, a former Olympian
and Captain of Indian Hockey Team against Hockey India (hereinafter "HI") to the Competition
Commission of India (hereinafter "Commission") under Section 19(1)(a) of The Competition
Act, 2002 (hereinafter "Act") on November 15, 2011. The case centered on the events leading to
the organization of World Series Hockey League (hereinafter "WSH") by Indian Hockey
Federation in collaboration with Nimbus Sport. The case pertains to the alleged imposition of
restrictive conditions by HI, on players for participation in un-sanctioned prospective private
professional leagues resulting in undue restrictions on mobility of players and on prospective
private professional leagues leading to denial of entry to competing leagues.

Issue

Whether there has been any abuse of dominance by HI/FIH?

11
 2013 Comp LR 543 (CCI)
 P a g e | 27

Reasoning

Commission, after perusal of allegations levelled by the Informants and findings of DG notes
that all allegations are stemming from the following two primary issues i.e (a) Regulations
brought by FIH and implemented by HI relating to sanctioned and unsanctioned events; and (b)
Conditions contained in CoC Agreement signed between HI and players.

The Commission examined in depth the findings of DG that the manner of application and the
timing of these regulations as indicative of abuse of dominance and is of the opinion that
intent/rationale behind introduction of the guidelines as submitted by FIH relating to sanctioned
and unsanctioned events needs to be appreciated before arriving at any conclusions. Moving
further, on the proportionality aspect, the Commission opines that proportionality of the
regulations can only be decided by considering the manner in which regulations are applied. It is
the manner of applying regulations that raise competition concerns as it may be used as a tool for
foreclosing new entrants. The present allegations centre on foreclosure of market to rival leagues
by sports associations in the garb of rules and Bye laws relating to sanctioned and unsanctioned
events. In the present case, the Commission notes that firstly, no approval was sought by
WSH(World Series Hockey). Secondly, the rules apply prospectively and thirdly, based on the
reply from Ministry of Youth and Sports Affair (MoYAS) on the selection of probables for the
Indian team, DG had concluded that none of those players, who participated in the WSH series
were included in the 48 core probable and subsequent tours to London and Malaysia. The
Commission considered HI's submissions that the reason behind the players not being selected
was their non-participation in training camp which otherwise was mandatory and not owing to
participation of players in WSH. HI had also clarified that the dates for training camp were as per
schedule approved by Ministry almost a year in advance and HI also stated that the list of
probables were issued before commencement of WSH. Thus, the Commission noted that the
evidences were insufficient to conclude that HI had indeed acted against the players who
participated in WSH.

The Commission thus concludes that the allegation against HI/FIH for causing denial of market
access under Section 4(2)(c) to WSH is not substantiated considering the provisions of Bye laws
as well as the manner of application of Bye laws.
 P a g e | 28

On the allegation of violation of Section 4(2)(e) of the Act made by the IInformant, the
Commission notes that the allegation by IInformants was based on their definition of relevant
market being the market for domestic hockey events and further considering WSH to be a
domestic event that requires sanctioning from national association of hockey in India. The
Commission's definition differentiates between the representative events and private professional
leagues and is neutral to the definitions of domestic/international events as contained in FIH bye
laws. Thus on the basis of the above facts and keeping in mind "inherent and proportionality"
approach to regulations, the Commission finds no validity in the allegations relating to
contravention of Section 4(2)(e).

Further, Commission does not agree with the DG's conclusions, that the CoC is not a vertical
agreement. The key aspect of a vertical relationship is that the agents in such a relation should be
at different stages of the production chain. Competition concerns in a vertical relationship arise if
one of the agent on account of its market power is able to impose unreasonable restraints on the
other, that are likely to cause an appreciable adverse effect on competition. In context of this
case, HI is the buyer of services of hockey players for the production/organization of any hockey
event. This relationship between HI and the players is hence tantamount to a vertical relationship
where HI and the players are at different stages of the production chain.

Conclusion

The Commission examined the conditions contained in CoC agreement for their restrictive
effects in conjunction with specificities of sports. Hence Commission is of the opinion that these
restrictive conditions are inherent and proportionate to the objectives of HI and cannot be fouled
on per se basis till there is any instance where these are applied in a disproportionate manner for
which there is no evidence at present. The Commission concludes that allegations of violation of
Section 3(4) and 4(2)(c) cannot be substantiated.