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EBEBE4
EBEBE4
(2020) PL May 64
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Commission's approach so that any case concerning “abuse of dominant position” does
not go unchecked by the Competition Commission.3
caused great havoc in the telecom market forcing the other operators to cut down their
charges substantially. Meanwhile, Jio, became the second largest telecom operator in
the market using its pricing techniques.9
In Fast Track Call Cab (P) Ltd. v. ANI Technologies (P) Ltd.10 , CCI rejected the
allegations of abuse of dominance against OLA under Section 4 of the Competition Act
reiterating that in presence of so many taxi aggregators, Ola cannot be said to be
dominant.
All India Online Vendors Assn. filed a complaint against the two e-retailers, Flipkart
and Amazon, and raised concerns over deep discounting and preferential treatment to
particular sellers on their platform, hence amounting to abuse of dominant position.11
CCI, after assessing the online market, held that the online retail sector is a new
business model wherein no single player can be said to be dominant and such players
need to be given
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The above given rulings are a testimony to the fact that a prima facie proof of
dominance lets go off enterprises that may not be dominant then, but possess the
ability to become dominant in the near future or the ones that are in the transition
phase of becoming dominant. What the CCI overlooked was the ability of Jio to make
as huge as 3 million investments in the market, capacity of Ola to provide heavy
discounts and troves of consumer data in control of Flipkart and Amazon, all of which
are enough to tilt the market in their favour, giving them unsurpassable advantages
over their rivals.13 By not holding these enterprises dominant, are we waiting for them
to take over the market?
Lenient Approach Towards Buyer's Dominance
In Indian National Shipowners' Assn. v. ONGC, CCI investigated the ONGC for
abuse of its dominant position by inclusion of unfair, one-sided terms and conditions
in its charter hire agreements.14 Generally, the dominant player is the supplier
affecting the buyers or other competitors in the market but in this unique case,
dominance was not arising out of a monopolist supplier but a monopsonist buyer,
affecting the selling side of the market.15
The case is yet to be decided on merits but it is interesting to note that the CCI
refused to grant an interim relief to the informants for restraining the ONGC from
terminating the agreement. The possible reason behind such an approach is that in
Indian competition law, dominance is perceived to be caused only by a supplier or
seller and although the section is wide enough to cover the concept of buyer
dominance, the courts are reluctant to hold a buyer as dominant.
International jurisprudence on the topic discusses about the existence of a
monopsony wherein the buyers in power, based on their economic significance in the
relevant market, obtain favourable terms of purchase from the supplier. This can lead
to a condition of strong buyers facing weak sellers.16 There seems to be different views
on the manner in which the courts should address monopsony issues.17 Some scholars
believe that monopsony is advantageous for consumers in the short run by restricting
purchases and forcing market prices down. Since, antitrust laws work for consumer
benefit, courts should not interfere until the consumers are forced to pay a higher
price. The other set of scholars propagate that although the price goes down, but the
costs still remain high as a result of which sellers are at a loss. Competition law does
not only protect the consumers but ensures healthy and fair competition in the
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market.18 And this can only be achieved in a market that is not only free from
monopoly but also monopsony. Swift & Co. v. United States19 held that downstream
harm is not necessary to bring a monopsony matter to the court and in fact,
monopsony is the mirror image of monopoly.
Cases, all over the world appear very restrictive on buyer agreements because of
less effect of monopsony power on consumers. If a case involves both, effect on buyer
and seller, the competition agencies simply focus on the former one by fitting the case
into a not so twisted format.20 But,
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given the increasing complexities of the market, it is perhaps clear that this issue will
frequently come up in cases, demanding a clear interpretation from the judiciary.
Sherman Antitrust Act of 1890,25 not only punishes monopolisation but also “attempt
to monopolise” the market. The threshold of “prima facie proof of dominance” should
be lowered in cases where there exists a clear
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evidence of the ability of the firm to dominate the market.26 And this ability can be
proved in presence of favouring factors like high switching cost, data holding,
differential services, quality of services, amount of investment, growth rate.27
Had such an approach been adopted in recent cases, enterprises like Jio, Ola,
Swiggy, Zomato would not have been left unexamined by virtue of not holding a
dominant position.Why wait for the organisation to dominate the relevant market and
disturb the competitive fabric of the country, when their actions can be curtailed
within time.
Secondly, there should be a strict stance taken by the CCI for tackling buyer's
monopoly. Competition law is not solely about regulating the supply-side market but
also focusing on the demand side. It is not only the consumers who are to be
protected from sellers but also vice versa. The South African Amendment Bill, 2017,
prohibits dominant buyers from imposing unreasonable terms on sellers in the market
and if there exists a prima facie doubt, then the buyer has to prove the contract as a
fair one. The Kenyan competition law rules propose a list of factors that hold the buyer
dominant like delayed payments, unilateral termination, transfer of risk to supplier and
demand of preferential terms that are unfair to suppliers.28
Indian competition authorities should no longer hesitate in holding the buyer
responsible for abuse of dominance irrespective of any harm accrued on consumers.
The list of factors under Section 4 of the Competition Act, that help the court in
establishing dominance, like refusal to deal, refusal to supply, predatory pricing, denial
to market access, leveraging, etc., are all supplier-centric. There should be inclusion of
factors that shall assist the court to determine buyer power, in Section 4 of the Act by
way of amendment to the section or by issuance of guidelines from the competition
authorities. There is no doubt in the fact that monopsony disturbs the economy, and it
is time that the CCI addresses this novel issue.29
Thirdly, the CCI should issue set guidelines for determining relevant market in
competition cases. Also, the Commission should adopt a wide approach in defining
relevant markets, given the increase in technical advancements in the country. From a
form-based approach of determining the relevant market, there should be shift to an
effect-based approach30 wherein the focus should be on the effect of variation in the
market rather than in the modification of the product
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itself31 . If the change is such that the set of purchasers and sellers are reorganised
altogether, it is sufficient to hold it as a unique market.32 This can be easily applicable
on high technology sectors and real estate.
But, in case of the traditional sectors like agriculture, mining and construction, the
nature of the market demands the CCI to focus more on product substitutability rather
than change in purchasers and sellers.33 Also, the CCI has to be increasingly cautious
in dealing with multi-sided markets like advertising, wherein demand from one side
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increases supply from the other side. In such matters, the CCI should rule on a case-
to-case basis, based on change in one side by price variation of the other side. What
has to be kept in mind is that any enterprise should not be let off easily because of a
non-proper evaluation of the relevant market which shall harm the economy in the
long run.34
Conclusion
Welfare doctrine states that only when there is perfect competition in the market,
consumer's welfare is maximised. For this, there should be no enterprise that misuses
its supremacy to render the market less competitive. Section 4 of the Competition
Act35 is an antithesis to such abuse of dominance. The main objective of Section 4 of
the Competition Act is to avoid singular ventures or such groups from driving out
competitors from the market and utilising their position to exist independently of other
market forces.36
Section 4 is one of the chief tools in the hands of the competition authority to
control abusive enterprises from obstructing free competition in the market. With
increasing complexities in the market, necessary changes should be brought to this
part of the legislation so that it does not turn redundant. The nature of trade is
changing
Abuse and so
of Dominance, should
available at 37 the laws regulating them.
of the “Equally Efficient Competitor” in the Assessment of
Keeping in mind that Parliament enacted the Competition Act in 2002 with a view
to protect the competitiveness in the economy, the laws ensuring this competitiveness
should be updated to ensure the primary object of the Act is sustained amidst such
puzzling changes in the market.38
———
*
4th year law student, National University of Study and Research in law, Ranchi, e-mail:
shubhi.anwesha@gmail.com.
4 D.P. Mittal, Competition Law and Practice 334 (3rd edn., 2011).
5 Ansul Industries v. Shiva Tobacco Co., 2007 SCC OnLine Del 74
6 Mohit Manglani v. Flipkart India (P) Ltd., 2015 SCC OnLine CCI 61 : (2015) CCI 97
7 Bharti Airtel Ltd. v. Reliance Industries Ltd., 2017 SCC OnLine CCI 25 : (2019) 1 Comp LJ 1
8Patrick Bolton, Joseph F. Brodley & Michael H. Riordan, Predatory Pricing: Strategic Theory and Legal Policy, 72
Yale LJ 45, 50-65 (2015).
9 Demsetz, Harold, The Cost of Transacting, 9, The Quarterly Journal of Economics 22, 33-53 (1968).
10
2017 SCC OnLine CCI 36 : 2017 Comp LR 667.
11 All India Online Vendors Assn. v. Flipkart India (P) Ltd., 2018 SCC OnLine CCI 97 : 2018 Comp LR 1122.
12
Bharti Airtel Ltd. v. Reliance Industries Ltd., 2017 SCC OnLine CCI 25 : (2019) 1 Comp LJ 1.
13
Ibid.
14 2018 SCC OnLine CCI 47 : 2018 Comp LR 765.
15 AdCept Technologies (P) Ltd. v. Bharat Coking Coal Ltd., 2013 SCC OnLine CCI 32 : 2018 Comp LR 769.
16
In re, Ghai Enterprises Private Limited and Quality Ice Creams, RTP Enquiry on Monopoly No. 18/1983 (India).
17Randy M. Stutz, The Evolving Antitrust Treatment of Labour-Market Restraints: From Theory to Practice, 2
AAI 34 (2018).
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18J. Thomas Rosch, Monopsony and the Meaning of “Consumer Welfare”: A Closer Look at Weyerhaeuser, 2007
Colum. Bus. L. Rev. 349, 354 n 2, 359 (2007).
19
1905 SCC OnLine US SC 29 : 49 LEd 518 : 196 US 375 (1905).
20 Liber Reach, What is an Abuse of a Dominant Position? 287 TEUComp J 56 (2003).
21 Lennart Ritter, W. David Braun, European Competition Law: A Practitioner's Guide 42 (3rd edn. 2005).
22
Hoffmann-La Roche & Co. AG v. Commission of the European Communities, 1979 ECR 461.
23 House of Diagnostics LLP v. Esaote SpA, 2016 SCC OnLine CCI 49 : (2016) 287 TEU Comp J 56.
24 BPB Industries Plc v. Commission of the European Communities, 1993 ECR II-389.
25
Sherman Antitrust Act, 1890, S. 2 (US).
26Telecom Regulation Authority of India, Recommendations on Intra Circle Mergers & Acquisition Guidelines (April
2016).
27 China's Ministry of Commerce, Announcement on Supply-Related Dominance, (July 2018).
28
Herbert Hovenkamp, Federal Antitrust Policy: The Law of Competition 352 (4th edn., 2011).
29 Richard A. Posner, Antitrust Laws 112 (3rd edn., 2008).
30Nicholas J. Franczyk, Jurisprudence Development (Abuse of Dominance): Issues & Implications”, 3 Int CCR,
566 (2016).
31
Christian Ahlborn & David S. Evans, The Microsoft Judgment and its Implications for Competition Policy towards
Dominant Firms in Europe; David J. Gerber, Competition Law and International Trade: The European Union and
the Neo-Liberal Factor, 4 PRL PJ, 43-44, 26 (1995).
32Jazz Colens, Relevant Market: Third Report on the Implementation of the 1998 Council Recommendation 8
OECD JCL (2006).
33 United Brands Co. v. Commission of the European Communities, 1978 ECR 207 : (1978) 3 CMLR 83.
34
Alison Jones and Christopher Townley, “Competition Law,” in European Union Law, 506 Oxford University Press
(2014).
35 Competition Act, 2002, S. 4, (12 of 2003), Acts of Parliament, 2002 (India).
36 HallyLor, Commission Notice in the Definition of Relevant Market and Abuse of Dominance, 375 OJ (1996).
37
Martin Mandorff & Johan Sahl, The Role of the “Equally Efficient Competitor” in the Assessment of Abuse of
Dominance, available at <https://www.ucl.ac.uk/cles/events/materials/13-11-13-gormsen.pdf> (accessed on 30
-3-2019).
38
S.M. Dugar, Guide to Competition Act 1080 (5th edn., 2010).
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