9th SEM TER 2022

Submitted by: Milind Gautam (18/ILB/068)

Submitted to: Mr. Gaurav Yadav

ABUSE OF DOMINANT POSITION UNDER COMPETITION ACT, 2002

1
TABLE OF CONTENTS
 INTRODUCTION:.......................................................................................................................3
 CONCEPT OF THE ABUSE OF DOMINANT POSITION............................................................3
 IDENTIFICATION OF ABUSIVE USE OF DOMINANT POSITION [SECTION 4(2)]...................4
 TYPES OF DOMINANT POSITION............................................................................................5
 Exploitative such as excessive pricing...............................................................................5
 Exclusionary such as a denial of market access...............................................................5
 DETERMINATION OF ABUSE OF DOMINANT POSITION IN THE MARKET:.........................6
 Determination of the relevant market..............................................................................6
 Determining the dominant position..................................................................................7
 Determining if the dominant position is abused..............................................................7
 INUIRY BY THE COMMISSION................................................................................................7
 Powers of the Commission.................................................................................................8
 Penalties and Sanctions......................................................................................................9
 IPRS AND ABUSE OF DOMINANCE:......................................................................................10
 CONSEQUENCES OF ABUSE OF DOMINANCE:.....................................................................10
 CONCLUSION:........................................................................................................................11

2
  INTRODUCTION:
In simple terms 'dominant position' means something in a superior position as compared to
others based on some factors. However, staying in a better-off position doesn't harm anyone,
unless an individual is exploiting such power. Therefore, having a dominant position cannot be
considered bad per se. However, abusing such a position based on its superiority is considered
inadequate.

The abuse of dominant position impedes fair competition between the firms, exploits consumers,
and makes it difficult for other players to compete with the dominant enterprise on merit. The
Act does not consider Dominance as anti-competitive but its abuse. Dominance rather than abuse
of dominance should be the key for competition policy. Abuse of dominance which prevents,
restricts or distorts competition needs to be frowned by Competition Law. But the dominance
has the tendency to be abused.

 CONCEPT OF THE ABUSE OF DOMINANT POSITION

Section 4 of the Competition Act, 2002 provides for the prohibition of abuse of dominant
position. Explanation (a) of the said section defines ‘dominant position’ of an enterprise as its
position of strength in the relevant market in India which makes it possible to:

1. Operate independently of its competitors in the relevant market, or

2. Affect its competitors or the relevant market in its favour.

An enterprise which is in a dominant position in the market may disregard market forces and
unilaterally impose trading conditions, fix prices, etc. the abuse of the dominant position refers
to anticompetitive business practices in which a dominant firm engages unlawful acts in order to
restrict the competition, or to eliminate the effective competition, or maintain/increase its
position in the market.

Section 19(4) of the Act further provides factors that are required to be taken into account by the
CCI while determining the position of an enterprise. Some of the factors are market share, size,
resources, economic power of the enterprise, dependence of consumers on the enterprise, entry
barriers, market structure, etc,.

3
In Re. M/s ESYS Information Technologies Pvt, Ltd. v. Intel Corporation (Intel Inc.).1 the CCI
in order to determine the dominant position of Intel not only acknowledged the market share of
the Intel but also considered other factors such as consumer preference due to the brand name,
the presence of the high entry barriers in the relevant market, the significant intellectual property
rights of Intel and the scale and scope enjoyed by Intel.

 IDENTIFICATION OF ABUSIVE USE OF DOMINANT POSITION [SECTION

4(2)]
There are five kinds of abusive use of dominant position-

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

happens when an undertaking or gathering legitimately or in an indirect way forces
prejudicial conditions on the sale of goods or rendering of costs or cost in deal or
acquisition of ruthless cost of products or administrations.

2. Limiting creation or specialized or scientific improvement: An abuse of dominant

position occurs in the market where an endeavor or group legitimately or in an indirect
way forces conditions that limit the creation of the merchandise or specialized or logical
advancement bringing about the creation of the products or administrations.

3. Denial of access to showcase, barriers to entry and development: Any condition that
makes forswearing access to the market in any way will comprise an abuse of the
dominant position.

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

agreements subject to an acknowledgment of advantageous commitments by different
parties and those commitments are to such an extent that by their very nature or as per
business use in that field, they have no association with the topic of the agreement.

5. Protection of different markets–when an enterprise utilizes its situation in a significant

market to go into another market, at that point there is an abuse of dominant position.

1
Re. M/s ESYS Information Technologies Pvt, Ltd. v. Intel Corporation (Intel Inc.), Case No. 48 of 2011.

4
Thus it can be stated that Section 4(2) of the Act indicates the accompanying practices by a
dominant enterprise or group of endeavors as misuses are straightforwardly or in an indirect way
of imposing out of line or oppressive condition in the sell or purchase of goods or
administration; straightforwardly or in an indirect way of imposing an unjust or prejudicial cost
in buy or deal (counting ruthless cost) of products or administration; constraining or confining
the creation of products or arrangement of administrations or market; constraining or confining
specialized or logical improvement identifying with merchandise or administrations to the
partiality of buyers; denying market access in any way; making the finish of agreements subject
to acknowledgment by different groups of beneficial commitments which, by their temperament
or as per business use, have no association with the subject of such agreements; and using its
dominant situation in one important market to enter into or ensure other applicable markets.

 TYPES OF DOMINANT POSITION

There are two types of domination:

 Exploitative such as excessive pricing

Exploitative activities are those where the prevailing body abuses its strength by forcing biased
or potentially low conditions on different firms or shoppers. In the case of, Pankaj Agarwal v.
DLF,2 where, for a situation relating to the distribution of apartment, the agreements drafted
singularly by Delhi Land and Finance (DLF), empowered them to be discretionary about the
designation of super-area, secretive about data pertinent to the buyer, like the number of the
apartment on the floor, and to drop portions and relinquish booking sums. The Commission held
the agreements to be exploitative against purchasers, and consequently, it was one-sided and
abusive.

 Exclusionary such as a denial of market access

Exclusionary activities are those in which the dominant body utilizes its strength to confine entry
of competition into the relevant market. For instance, in the case of Re Shri Shamsher Kataria v
Seil Honda,3 where there already existed agreement between the dominant entities and the
Overseas Suppliers of unique vehicle parts which kept the Overseas Suppliers from providing

2
Case No. 13 & 21 of 2010 and Case No. 55 of 2012,
3
Re Shri Shamsher Kataria v Seil Honda, Case No. 03/2011.

5
parts to free repairers, such understandings were held to be anti-competitive as they limited
passage of new firms.

 DETERMINATION OF ABUSE OF DOMINANT POSITION IN THE MARKET:

In order to determine the abuse of dominant position by an enterprise in the market in India
generally there are three steps that are followed which are:

 Determination of the relevant market

The first thing to be resolved in quite a while of supposed abuse of dominant position is the
‘relevant market’ in which the accused party has a predominant position. The reason served by
depicting a relevant market is to characterize the degree inside which the situation of an
endeavor is to be tried for strength and misuse thereof. The ‘relevant market’ is characterized as
‘product’ and ‘geography’4 in other words, the applicable market recognizes the specific
item/administration or class of items created or benefits rendered by an enterprise(s) in a given
geographic territory. 

On the demand side, the relevant product market includes all such substitutes that the consumer
would switch to, if the price of the product relevant to the investigation were to increase. From
the supply side, this would include all producers who could, with, their existing facilities, switch
to the production of such substitute goods. The geographical boundaries of the relevant market
can be similarly defined. Geographic dimension involves identification of the geographical area
within which competition takes place. Relevant geographic markets could be local, national,
international or occasionally even global, depending upon the facts in each case. Some factors
relevant to geographic dimension are consumption and shipment patterns, transportation costs,
perishability and existence of barriers to the shipment of products between adjoining geographic
areas. For example, in view of the high transportation costs in cement, the relevant geographical
market may be the region close to the manufacturing facility.

In the case of Bijaya Poddar v. Coal India Ltd,5 it was held that these are territories or areas
where demand and supply of products of administrations can be said to be homogenous and
discernable from markets in neighboring regions. 

4
Section 2(r), of the Competition Act, 2002.
5
Case No. 59 of 2013.

6
Similarly, in the case of Atos Worldline v Verifoneindia,6 it was held that naturally, a few
factors at that point, as regulatory trade barriers, local detail necessities, national acquirement
approaches, satisfactory conveyance offices, transport costs go under the domain of thought.
Consequently, if every such factor were uniform all through the nation versus an item, the entire
nation would be the relevant geological region.

 Determining the dominant position

Once the relevant market has been defined the next stage would be to assess and determine
whether the enterprise holds dominant position in that relevant market or not. Explanation (a) of
Section 4 of the Competition Act, 2002 defines ‘dominant position’ of an enterprise as its
position of strength in the relevant market in India which makes it possible to operate
independently of its competitors in the relevant market, or affect its competitors or the relevant
market in its favour. Section 19(4) of the Act further provides factors that are required to be
taken into account by the CCI while determining the position of an enterprise. Some of the
factors are market share, size, resources, economic power of the enterprise, dependence of
consumers on the enterprise, entry barriers, market structure, etc.

 Determining if the dominant position is abused

The final stage after establishing the relevant market and the dominant position of the enterprise
is to assess if the enterprise has abused its dominant position in that market. It has already been
mentioned that dominance in itself is not prohibited but its is the abuse of the dominance that is
illegal under Section 4 (1). Abuse is stated to occur when an enterprise or a group of enterprises
uses its dominant position in the relevant market in an exclusionary or/and an exploitative
manner. Furthermore, Section 4(2) lists the activities that would amount to abuse of dominant
position.

 INUIRY BY THE COMMISSION

In exercise of powers vested under Section 19 of the Act, the commission may ask into any
supposed negation of Section 4(1) of the Act that states about the abuse of dominant
position. Section 19(4) gives a detailed list of elements that the Commission will consider while
asking into any claim of abuse of dominance. A portion of these components is the market share

6
Case No. 56 of 2012.

7
of the endeavor, size, and assets of the venture, size, and significance of the contenders, reliance
of buyers, passage obstructions, and social commitments and expenses in the pertinent
geographic and item showcase. 

The Commission, on being fulfilled that there exists an at first sight instance of abuse of
dominant position, will guide the Director-General to cause an examination and outfit a report.
The Commission has the forces vested in a Civil Court under the Code of Civil Procedure in
regard to issues like summoning or authorizing the participation of any individual and examining
him on the pledge, requiring revelation and creation of records and accepting proof on an
affidavit. The Director-General, to complete an examination, is vested with forces of the civil
court other than forces to lead ‘search and seizure’.

 Powers of the Commission

After request, the Commission may pass inter-alia any or the entirety of the following orders
under Section 27 of the Act:

 direct the parties to suspend and not to reappear into such an understanding;
 direct the endeavor or enterprise concerned to alter or change the agreement.
 direct the enterprise concerned to submit to such different requests as the Commission
may pass and conform to the bearings, including payment of expenses, assuming any;
and
 pass such different orders or issues such directions as it might esteem fit.
 can force such punishment as it might consider fit. The punishment can be up to 10% of
the normal turnover for the last three preceding financial years of endless supply of such
people or ventures which are parties to bid-rigging or collusive bidding.
 Section 28 enables the Commission to coordinate the division of a venture or enterprise
appreciating the prevailing situation to guarantee that such an undertaking doesn’t
showcase an abuse of dominant position.

Thus, the available remedies are, when the abuse of dominant position has been built up, the
competition specialists can take certain measures for the same:

 A restraining order.

8
  The penalty which might be 10% of yearly turnover.
 Direct the enterprise to make a move which the authority regards fit.
 Give any other request which it might think fit.
 Divide the prevailing endeavor.
 In the instance of allure to the Competition Appellate Tribunal, the Tribunal may arrange
for payment to the party bearing misfortune.

 Penalties and Sanctions

To an undertaking held to the abuse of dominant position, the Commission can do several things
on its parts-

 Direct the undertaking to suspend such acts that add up to misuse. Occasions of such uses
by the Commission can be found in cases like in Re Shri Shamsher Kataria v. Honda
Siel Cars India Ltd,7 and, also, Atos Worldline v. Verifoneindia,8 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.

There has been some concern about this arrangement, however, as far as possible, it gives no
rules for the count of punishments. The Commission, as well, is yet to concoct rules of its own.
Thus, starting at now, the Commission has total tact in figuring punishments to be endless supply
of such individuals or ventures which are gatherings to such maltreatment or abuse of power. Be
that as it may, the COMPAT has put a few conditions on the Commission undoubtedly. For a
situation, COMPAT advised CCI for CCI’s act of granting huge punishments without giving any
thinking to the equivalent. Besides, in a similar case of M/s Excel Crop Care Limited v.
Competition Commission of India,9 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.

Be that as it may, an anomaly is wild right now the working of the Commission and the
Appellate Authority, for the COMPAT itself neglected to follow its point of reference of
‘pertinent turnover’ in the case of M/s DLF Limited v Competition Commission of India &

7
Case No. 03/201.
8
Case No. 56 of 2012.
9
M/s Excel Crop Care Limited v. Competition Commission of India, AIR 2017 SC 2734.

9
Ors.,10 COMPAT didn’t confine the figuring of the punishment based on DLF Limited’s
turnover emerging just from the private fragment, in spite of the significant market all things
considered being the market for ‘very good quality private settlement’. COMPAT maintained the
punishment demanded by the CCI, which was determined based on DLF’s turnover relating to
its whole business (i.e., the advancement of private, office and business properties).

Lastly, the Commission can pass a request to cause the division of the prevailing venture with
the end goal that doesn’t manhandle its predominant position.

 IPRS AND ABUSE OF DOMINANCE:

 Intellectual Property Rights (IPRs) involve grant of exclusive rights to the right holders
to exploit the results of their innovation so as to provide incentive to innovate. It protects
the applications of novel ideas and information that are of commercial value. The
Intellectual Property Rights generate market power. It lessens competition while the
Competition Act engenders competition. It is, therefore, necessary to draw a balance
between the abuse of market power and protection of the Intellectual Property Rights
holders. The Competition Act exempts reasonable use of such rights by the rights
holders. However, the actions by enterprises that shall be treated as abuse, specified
under section 4(2) of the Competition Act, shall stand applicable equally to Intellectual
Property Rights holders provided such rights are considered by the Competition
Commission to render the holder a dominant player in the relevant market.

 CONSEQUENCES OF ABUSE OF DOMINANCE:

The Competition Commission, after an inquiry into the abuse of dominant position, may pass all
or any of the following orders under section 27 of the Competition Act:

● direct an enterprise with dominant position involved in abuse of such dominant position
to discontinue such abuse;

● impose penalty not exceeding ten percent of the average of the turnover for the last three
preceding financial years, upon each of such person or enterprises which are parties to
such abuse;

10
M/s DLF Limited v Competition Commission of India & Ors.2018. Civil Appeal No(s). 6328/2014.

10
 ● direct the enterprises concerned to abide by such other orders as the Commission may
pass and comply with the directions, including payment of cost, if any.

In addition to the aforesaid orders, the Competition Commission has the power to order division
of enterprise enjoying dominant position to ensure that it does not abuse its dominant position
under section 28 of the Competition Act.

 CONCLUSION:
Thus, with the increasing use of abuse of dominant position, our implementation of statutory
laws relating to the Competition Act also became relevant. The reason behind such a law is to
ensure the independence of business and also to have an unstigmatised economic outlook
without any fear of the dominant position of any other in the economy. Therefore, in the market,
there should be an equal opportunity to all who want to do the business.

However, competition should prevail as long as it is healthy and as long as it helps the entire
society to grow but it becomes disastrous when one starts to overpower the other in their own
ways of business.

11