 Unit:- 3

Competition Law in India

 By:- Siddharth Tyagi

 SECTION 3 :- Anti-Competitive Agreement

 With dynamic trends in the new economic market scenario, there was an enactment of new
Competition law regime in India. One of the major objectives of this law was to change
Indian economic policies, removal of trade barriers and enforce pro-trade changes. All this
would ensure fair competition in the market which would benefit both the consumer and
ensure smooth functioning of the market at the same time not proving to be arbitrary. In
furtherance of the same, it was necessary to ensure that the agreements entered by trading
entities do not acquire an anti-competitive nature.

 Therefore, while engaging in a business activity in India, the parties to an agreement

although have the freedom of trade are prohibited from entering into agreements that are
anti-competitive in nature.

 It might be characterized as one, which interferes with the commercial freedom of either
party to the agreement to trade freely as it could wish.

 Anti-competitive agreements are agreements among companies in a commercial transaction

that can weaken competition in a specific market or enrich one specific group at the cost of
the others. Such anti-competitive contracts are prohibited by the Competition Act, 2002.

 Competition Act of 2002 defines the kind of anti-competitive agreements that cannot be
made in India. According to Section 3 of the Competition Act, any agreements entered into
are deemed to be anti-competitive if it falls into any of the categories as mentioned in the
section.

 Section 3(1) No enterprise or association of enterprises or person or association of persons

shall enter into any agreement in respect of production, supply, distribution, storage,
acquisition or control of goods or provision of services, which causes or is likely to cause an
appreciable adverse effect on competition within India.

 This is in order to ensure that agreements entered into between enterprises do not distort
the competitive structure of the market.

 Section 3(2) Any agreement entered in contravention of the provisions contained in

subsection (1) shall be void.

 Ramakant Kini v. Dr LH Hiranandani Hospital, Case no 39 of 2012 CCI

 The CCI pointed out that Section 3(1) prohibits any agreement in respect of provision of
services which causes or is likely to cause an appreciable adverse effect on competition
within India & therefore the ambit of S.3 is extremely wide & Covers all kinds of commercial
Agreement
  There has been a contentious issue, as to what constitutes an agreement to come within
the ambit of competition enquiry. But it has been understood that there is no need for an
explicit agreement in writing but there should be consensus between the parties concerned,
also referred to as meeting of mind’s consensus ad idem.

 CARTELS

 Cartels is an association of producers, sellers, distributors, traders or service providers who,

by agreement amongst themselves, limit, control or attempt to control the production,
distribution, sale or price of, or trade in goods or provision of services.’

 Cartels fall in the category of pernicious agreements which tend to cause great harm to
consumers and economy in general

 Across the world, cartels are considered to be one of the most distortive conducts under any
competition regime. It involves unfair practice by the competitors in the form of price
collusion, which in turn leads to reduction of choice for the consumers

 Cartelization distorts prices and leads to adverse impact on the overall competitive structure
in the market. The severity of this conduct is evidenced by the fact, that cartels have been
subjected to the highest penalty, under the competition act – S.27 of the Act, any violation
of S.3 & 4 of the act, the commission may-

 Section 27(b) - impose such penalty, as it may deem fit which shall be not more than 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 agreements or abuse

(Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the
Commission may impose upon each producer, seller, distributor, trader or service provider included
in that cartel, a penalty of up to three times of its profit for each year of the continuance of such
agreement or ten percent. of its turnover for each year of the continuance of such agreement,
whichever is higher)

 As observed by the SC of India in Union of India v. Hindustan Development Corporation

[(1994) CTJ 270 (SC) (MRTP)] a cartel “is an association of producers who by agreement
among themselves attempt to control production, sale and prices of the product to obtain a
monopoly” cartel has been defined in Section 2(c) of the act.

 The direct effect of cartel is such that consumers pay more for the respective goods or
services than they would otherwise pay in an efficient competitive market.

 Therefore, put simply, cartels are contrary to an efficient competitive market structure.

 There are four primary recognized types of cartels:-

1) Price Fixing
Price fixing is an agreement between the potential competitors wherein they lay down a price to sell
their goods. Therefore, the aim and result of every effective price-fixing agreement is the elimination
of one form of competition (Hospital medical supplies, crude oil)

2) Market Sharing

It is an agreements between competitors that divide up the market. It can be in the nature of
agreeing on specific location of operation and non-intervention by others.

3) Limiting production

Production restrictions are agreements between competitors wherein the competitors agree to
restrict production. There is a presumption that such kinds of agreements are made to limit supply
and gain the ability to raise prices and such sort of agreements are treated illegal per se. Cement
Cartel case (Builders Association of India v. Cement manufacturers association, Case no. 29/2010)

4) Bid rigging

It occurs when two or more competitors agree they will not compete genuinely with each other for
particular tenders. This process allows one of the participants in the agreement to win the tender.
Participants may take turns and be the winner on different occasions.

 In re Sugar Mills (Case No 1 of 2010)

 For a cartel to exist, there must be an evidence to prove that cartel participants met and
decided to take such actions. It specifically elaborated that :-

i. There must be an evidence of the fact that the alleged cartel participants met and decided
to take such actions;

ii. Such actions must have been implemented

iii. There must be conclusive evidence of meeting of minds

 The commission later by time has also noted that they are not oblivious of the fact that the
anticompetitive conspiracies are often hatched in secrecy. And firms engaged in anti-
competitive activities are not likely to leave any evidence. Therefore, in absence of any
direct evidence of agreement among the conspirators, circumstantial evidence is required to
be looked into.

 To establish existence of a cartel it is important to prove : -

1. An agreement

2. Between an association of producers, sellers, distributors etc

3. Objective is to limit production, distribution, sale of price etc.

 It can be proved through circumstantial evidence, which in this case are of 2 types

i. Communication evidence
ii. Economic evidence

 TYPES OF ANTI-COMPETITIVE AGREEMENTS

 The MRTP Act which preceded the Act did not define terms such as cartels, price fixing, bid
rigging etc. However, the new act made several refinements to these concepts and broadly
classified anti-competitive agreements as horizontal and vertical.

 While horizontal agreements are covered by Section 3(3) of the act, Section 3(4) covers the
purview of vertical agreements.

 This act governs two types of agreements:-

1) Horizontal agreements S.3(3)

2) Vertical agreements S.3(4)

 Section 3(3) talks about horizontal agreements. Horizontal agreements are agreements
between two or more enterprises that are at the same stage of production chain and in the
same market, which—

a) directly or indirectly determines purchase or sale prices;

b) limits or controls production, supply, markets, technical development, investment or

provision of services;

c) shares the market or source of production or provision of services by way of allocation of

geographical area of market, or type of goods or services, or number of customers in the
market or any other similar way;

d) directly or indirectly results in bid rigging or collusive bidding, shall be presumed to have an
appreciable adverse effect on competition

 nothing contained in this sub-section shall apply to any agreement entered into which
increases efficiency in production, supply, distribution, storage, acquisition or control of
goods or provision of services. Such horizontal agreements that causes an AAEC is presumed
to be void.

 AAEC Under S. 3(3) read with S.19(3) of the Act

 In order to determine the AAEC of any agreement in India, the CCI is required to take into
consideration all or any of the following factors mentioned under S.19(3) of the Act:

a. creation of barriers for new entrants in the market;

b. driving existing competitors out of the market;

c. foreclosure of competition by hindering entry into the market;

d. accrual of benefits to consumers;

e. improvements in production or distribution of goods or provision of services; or

f. promotion of technical, scientific and economic development by means of production or
distribution of goods or provision of services.

 It is vital to note that the presumption stated in S. 3(3) of the act is a rebuttable one, and in
instances where an inquiry is conducted by the CCI, the burden of proof to show that the
concerned agreement does not cause or is not likely to cause an AAEC in India, lies with the
parties to such agreement.

 Therefore, although the plain reading of S. 3(3) would suggest that it is a per se violation, the
decisional practice of CCI suggests that the cartel arrangement must also result in AAEC in
India. Such decisional practice does show maturity because ultimately conduct which
violated the basic tenets of competition law must be caught which can be only analyzed
under rule of reason and not plain vanilla use of the per se rule.

 Multiplex Association of India v. United Producers/Distributors Forum (Case No 01 of 2009)

 The CCI, held that the producers/distributors with their collective market power attempted
to ensure that multiplex owners did not get the business of film exhibition till they agreed to
the proposal of enhanced revenue share. The CCI also noted that the revised revenue
sharing arrangement it resulted in Multiplex owners across the country increasing ticket
prices thereby adversely affecting the consumers. Therefore, the CCI held that the cartel like
conduct all the producers were in violation of S.3(3) of the act causing AAEC in India.

 Uniglobe Mod Travels Pvt. Ltd. V Travel agents federation of India

 The CCI, taking into account all the information on record, concluded that the opposite
parties very involved in taking a collective decision to issue a boycott call against Singapore
Airlines, on the basis of emails, joint notices containing all the associations names, and
advertisements and hoardings proclaiming their collective intention to boycott in
pressurised Singapore Airlines to revert to the Commission basis model. The CCI also
concluded that the conduct of the opposite parties affected consumers as the opposite
parties have considerable market power in respect of airline ticket sales.

 It is most often seen that the act of limit and control of production and supplies in the
market causes upward movement in the price of that product/service. Similarly, the
deliberate act of shortage in production and supplies as a result of cartelization in
product/service which has inelastic demand, inevitably results in high prices. This scenario is
a classic illustration of the cement cartel case.

 Section 3(4) talks about vertical agreements these are the agreements formed between
firms or individuals at various levels or tiers of the manufacturing chain. It is any agreement
amongst enterprises or persons at different stages or levels of the production chain in
different markets, in respect of production, supply, distribution, storage, sale or price of, or
trade in goods or provision of services, including-

a) tie-in arrangement;

b) exclusive supply agreement;

 c) exclusive distribution agreement;

d) refusal to deal;

e) resale price maintenance,

(a) tie-in arrangement includes any agreement requiring a purchaser of goods, as a condition of
such purchase, to purchase some other goods;

(b) exclusive supply agreement includes any agreement restricting in any manner the purchaser
during his trade from acquiring or otherwise dealing in any goods other than those of the
seller or any other person;

(c) exclusive distribution agreement includes any agreement to limit, restrict or withhold the
output or supply of any goods or allocate any area or market for the disposal or sale of the
goods;

(d) refusal to deal includes any agreement which restricts, or is likely to restrict, by any method
the persons or classes of persons to whom goods are sold or from whom goods are bought;

(e) resale price maintenance (RPM) includes any agreement to sell goods on condition that the
prices to be charged on the resale by the purchaser shall be the prices stipulated by the
seller unless it is clearly stated that prices lower than those prices may be charged.

shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to

cause an appreciable adverse effect on competition in India.

 Based on the reading of the section, vertical agreement are only void if they cause AAEC on
competition in India . The vertical agreements which will commonly cause appreciable
adverse effect are exclusivity agreements, which in turn, cause foreclosure of market. The
vertical restraints, which have the potential of foreclosing competition by hindering the
entry into the market:

i. Exclusive dealing and purchasing, Under such an agreement a retailer agrees to purchase or
deal in the goods of only one manufacturer making entry difficult for the new
manufacturers.

ii. Exclusive/selective distribution, the manufacturer supplies one or selected number of

retailers making entry difficult for the new retailers

iii. Tie in sales, full time forcing, quantity forcing and discounts, Tie in sales makes the
purchase of one product conditional on the sale of another product. Full time forcing is an
extreme case of the former where the retailer must stop the full range of the manufacturer’s
product. Under quantity forcing the retailer is required to purchase a minimum quantity of
certain product. Discounts, the retailer receives discounts based on its proportion of its sales
coming from the manufacturer. Such arrangements could make entry difficult for the
manufacturers and retailers
 iv. Slotting fees, This requires the manufacturer to pay a fee to get its product stocked. Such
entry could make difficult for entry of the new manufacturers.

In all the cases, it needs to be established that the restraints create a barrier for the new entry or
force the competitors to go out of the market.

 DEFENSES THAT CAN BE TAKEN UNDER SECTION 3(5):-

 JOINT VENTURE DEFENSE

 The act per se does not define the term joint venture. However, the same has been
interpreted through several case laws. From the judgements of the Apex court, JV connotes
an association of persons or companies jointly undertaking some commercial enterprise
wherein all contribute to assets and share risks.

 The JV defence may become difficult to avail as it requires a high burden of proof. The onus
is on the parties to prove that such agreement was in form of a JV

 Cartels can see joint venture defence by showing that it is a result of coordinated practices,
certain improvements in production or distribution of goods or services are caused. Further
it can be claimed when coordination results in promotion of technical, scientific or economic
development or certain benefits to the consumer.

 Courts have specifically held that even though joint venture defence is permitted, it cannot
take place in disguise for anti-competitive agreement

 IPR Defense

 The person has the right to restrain any infringement of reasonable conditions, as may be
necessary, for protecting any rights conferred under intellectual property rights legislation.
As a general provision pertaining to all agreements covered under section, this defence can
be specifically taken in the context of cartels also.

 EXEMPTION FOR EXPORT CARTELS

 The act also provides that the restriction of cartels would not be applicable to the right of
any person to export goods from India to the extent such agreements relate exclusively to
production, supply, distribution, or control of goods or provision of services for such export.

 LESSER PENALTY REGULATIONS (Leniency regime)

 The Competition Commission of India (Lesser Penalty) regulation, 2009 govern the
procedure in extent to which leniency by way of reduced penalties could be granted by the
CCI to applicants who make vital disclosures relating to cartel activity. An application is
required to be made to the CCI, by an enterprise seeking leniency under the lesser penalty
regulation, which contains all material information and evidence related to the
establishment for existence of a cartel

 Vital disclosure in this regulation means full and true disclosure of information or evidence
by the applicant to the Commission which is sufficient to enable the Commission to form a
 prima facie opinion about the existence of a cartel or which helps establish the
contravention of the provision for Section 3 of the act.

 First Applicant – 100% reduction of penalty , Second applicant 50% reduction of penalty,
third applicant 30% reduction.

 PRICE PARALLELISM

 Price parallelism can be understood as a mirroring effect where traders independently

pursue their ‘unilateral non-co-operative actions’ in view of what other rivals are doing.
Therefore, there is neither an explicit agreement nor a understanding among the traders.
Parallel pricing occurs if firms change their prices simultaneously in the same direction, and
proportionally. A concise representation of the degree of price parallelism is given by the
correlation between prices. Price parallelism is often used in prosecuting cartels as tool to
determine whether a pattern of collusion can be determined. Uniform conduct of pricing by
competitors permits inference on existence of a conspiracy between competitors.

 Price parallelism is an extremely tricky concept as authorities must distinguish between

situations involving strategic co-ordination which implies some sort of illicit collusion or
when it merely correspond to spontaneous coordination resulting from rational response of
members to their perceived interdependencies

 CCI is yet to firmly decide on this concept.

 SINGLE ECONOMIC ENTITY

 CCI has recognized this doctrine.

 It has been held that agreements between entities constituting one enterprise cannot be
assessed under section 3 of the act.

 Exclusive Motors Pvt Ltd v Automobili Lamborghini, CCI order 52/2012 of 6 th November
2012.

 In the above case it was held that even when Volkswagen India has a separate legal
existence, since it belonged to the same group as automobile Lamborghini they were
considered as single economic entity & internal agreements between them was considered
outside the scope of Section 3.

 Horizontal & Vertical Agreement

 HORIZONTAL

 Agreement between the competitors

 At the same stage of production

 Per-se Rule

 Burden on proof of defendants

  Agreements regarding price quality & quantity, Market allocation & bid rigging

 S.3(5) Exemption/Defenses

 VERTICAL

 Agreement between the persons at different stage of production

 Rule of reason

 Burden on proof of plaintiff

 Agreement for tie in agreement, exclusive supply, exclusive distribution, refusal to deal,
resale price maintenance.

 S.3(5) Exemption/Defenses

 SECTION 4:- Abuse of dominant position

 When an individual or a firm is in a stronger position, which allows them to act freely
irrespective of competitive pressures in the market sector, they are said to be in a dominant
position. They also have a positive influence on their rivals, customers, or the current market
situation. A dominant position refers to a company’s power in a particular market in India
that allows it to function freely irrespective of business pressures.

 To establish an abuse of dominant position, a corporation must first have a dominant

position in terms of a specific product and the geographic market for that product. Section 4
of the Competition Act, 2002, focuses on the prohibition of such misuse.

 Section 4 of the Act prevents any enterprise of group from abusing its dominant position.
The act also provides circumstances under which there is abuse of dominant position.
Section 4(2) prevents following acts resulting in abuse of dominant position.

 Section 4(1) No enterprise or group shall abuse its dominant position

 Section 4(2) There shall be an abuse of dominant, if an enterprise or a group:-

(a) directly or indirectly, imposes unfair or discriminatory—

(i) condition in purchase or sale of goods or service; or

(ii) price in purchase or sale (including predatory price) of goods or service

(b) limits or restricts—

(i) production of goods or provision of services or market therefore; or

(ii) technical or scientific development relating to goods or services to the prejudice of consumers;
or

(c) indulges in practice or practices resulting in denial of market access in any manner; or
(d) makes conclusion of contracts subject to acceptance by other parties of supplementary
obligations which, by their nature or according to commercial usage, have no connection with the
subject of such contracts; or

(e) uses its dominant position in one relevant market to enter, or protect, other relevant market.

 Enterprise – Definition

 In a nutshell, enterprise means a person which is engaged in an economic activity but does
not include any activity of the Government relatable to the sovereign functions of the
government including all activities carried on by the departments of the central government
dealing with atomic energy, currency, defense and space.

 Although what a sovereign function has never been elucidated by the CCI in the context of
competition law, interpretation of the term has been carried out by other legislations. It has
been extensively discussed in the context of understanding the scope of the term ‘other
authorities ’ under the definition of state under Article 12 of the constitution, which include
bodies that are agencies and instrumentalities of the state. Thus, this could be a useful
interpretation for competition perspective.

 Group – Definition

 It means two or more enterprises which, directly or indirectly, are in a position to –

i. Exercise 26% or more of the voting rights in the other enterprises; or

ii. Appoint more than 50% of the members of the BOD in the other enterprise; or

iii. Control the management or affairs of the other enterprise

 Thus, from the reading of the definition, it is clear that if an enterprise (Say A) would hold
more than 26% of voting rights in other company (Say B), directly or through a subsidiary, or
would have the right to appoint more than 50% of the directors of B or would control the
management of B, B would be a part of A’s group. The aspect of control has been dealt in
great detail in the chapter on regulation of combination.

 The definition of term ‘group’ has further been elaborated in ARIL v CONCOR [Arshiya Rail
Infrastructure Limited (ARIL) v Ministry of Railways through the Chairman, Railway Board
and Container Corporation of India Limited (CONCOR), Case Number 64/2010], it was held
that the term ‘group’ generally implies a degree of connection, cooperation, or common
interest among its members. In terms of the provision of the Act, if an enterprise is in a
position to participate, directly or indirectly, in the management or affairs of the enterprise
or exercises 26% or more voting rights in other enterprise, both the enterprises would
constitute a group.

 Abuse of Dominance

 There are 3 stages in determining whether an enterprise has abused its dominant position :-

1. Defining the relevant market

 2. Determining whether the concerned enterprise is in a dominant position/ has a substantial
degree of market power in that relevant market

3. Determination of whether the enterprise in a dominant position has engaged in conduct

amounting to abuse of dominant position.

 Dominant Position

 “Dominant position” means a position of strength, enjoyed by an enterprise, in the relevant

market, in India, which enables it to—

(i) operate independently of competitive forces prevailing in the relevant market; or

(ii) affect its competitors or consumers or the relevant market in its favour.

 The act expressly lays down the factors that are to be taken into account to determine
dominant position. Under S. 19(4) of the Act, the commission should regard certain factors
for determining whether an enterprise is in a dominant position. The logic remains that
while assessing the dominance of an undertaking it is important to consider all the
constraints present in the market, which hinders its ability to act independently and affect
the relevant market in its favour. Therefore, these factors help the commission to precisely
and accurately assess the dominance of alleged undertaking under the relevant market by
providing an objective point of view.

 These factors are –

a) Market share of the enterprise;

b) Size and resources of the enterprise;

c) Size and importance of the competitors;

d) Economic power of the enterprise and commercial advantage over competitors

e) Sale of service network of such enterprise

f) Any other factor which the commission may consider relevant for the inquiry

 The aspect of dominance and position of strength was succinctly described in MCX Stock
Exchange Ltd. v NSE India[Case no. 13/2009] Ltd where the CCI held :-

“The position of strength is not some objective attribute that can be measured along a prescribed
mathematical index or equation. Rather, it has to be a rational consideration of relevant facts,
holistic interpretation of (at times) seemingly unconnected statistics or information and application
of several aspects of the Indian economy. What has to be seen is whether a particular player in a
relevant market has clear comparative advantages in terms of financial resources, technical
capabilities, brand value, historical legacy etc. to be able to do things which would affect its
competitors who, in turn, would be unable to do or would find it extremely difficult to do so on a
sustained basis. The reason is that such an enterprise can force its competitors into taking a certain
position in the market which would make the market and consumers respond or react in a certain
manner which is beneficial to the dominant enterprise but detrimental to the competitors.”

 According to many legal scholar of Competition law, this definition may perhaps appear to
be somewhat ambiguous and capable of different interpretations by different judicial
authorities. But is must be noted that this ambiguity in the legislation is an intended legal
fiction, as a static arithmetic figure does not clearly establish real dominance and the same
yardstick cannot be applied uniformly across all the relevant markets sectors and industries.
The approach under the act is very flexible.

 Under the act, an enterprise with a share of say less than 25% of the market could possibly
be determined to be the dominant if it satisfies the certain criteria under the Act. On the
other hand, an enterprise with higher market share may not be considered as dominant if it
can be shown that their behavior is constrained by consumers and competitors. An example
that was quoted in this regard is that a firm with 20% market share may be a dominant
player if remaining 80% market share is scattered among a large number of players whereas
a firm with 60% market share may not necessarily be a dominant firm if the remaining 40% is
held by another key rival or if the market has little entry barriers and a new player can enter
the relevant market and pose and effective competitive constraint on the player holding 60%
market share.

 It is vital to note that under the Act, any cause of action arises only after dominance has
been established. Hence, it becomes a two-step process where the dominance is
established: first the definition of relevant market and second it is considered if the behavior
of the enterprise constitutes an abuse.

 Hence, abuse of dominance is dealt with in a very comprehensive manner under the new
act. It is only if the enterprise’s behavior counts as abuse in the S. 4(2) of the Act, that is
considered as abuse of dominance.

 Predatory Price

 It refers to strategies adopted by a dominant undertaking whereby it offers low prices to

consumers (below their cost of production) in the short term to ensure the exit of the
competitors and then followed by higher prices in the medium and long run to recoup the
losses. So basically a sacrifice.

 It may be a prudent business strategy on behalf of a dominant undertaking (who generally

have deep pockets) to engage in loss making activities for a short period of time which will
ensure the exit of the competitors.

 The act defines predatory pricing in Section 4. Predatory pricing is defined to mean: “the sale
of goods or provision of services, at a price which is below the cost, as may be determined
by regulations, of production of the goods or provision of services, with a view to reduce
competition or eliminate the competitors.” Thus, we see that under the definition of the
predatory pricing under the Act, the following two conditions must be fulfilled:

a) Pricing below cost; and

b) With a view to reduce competition and eliminate competitors.

 STRUCTURAL BARRIERS/ REGULATORY BARRIERS

 Government Regulations

 Legislation

 Intervention

 Technological patents

 Customer loyalty

 Government regulation often pursues public interest objectives (E.g., health and safety,
environmental protection, urban planning) which may require limitations on market
competition compatible with such goals. In these circumstances, regulation may prevent
entry in an absolute or a significant manner

 In certain sectors, licenses may be restricted because of the finite resources available.
Examples may be found in regulated markets such as telecommunications (limited number
of radio frequencies existing on a given spectrum) and air transport (limits to the landing or
gate slots available at a given airport at a given time). In such cases these sectors may be
granted exclusive concessions to provide the product or service in question or enjoy by
statute exclusive or preferential access to the essential facility necessary to carry out the
regulated activity.

 IPR may also amount to legal barriers when they prevent or make more difficult market
entry or expansion by competitors. In principle, IPRs are indicative of a dominant position
only when the product or technology protected by the IPRs.

 STRATEGIC BARRIERS

 These are artificially created by the firms within market indulging in anti-competitive
behavior to facilitate their enterprise thrive on such activities, while shutting the market
from external competition

 They basically create barriers to entry or expansion.

 However, business decisions that create barriers to entry or expansion are not necessarily an
abuse of dominance, and often are part of legitimate, procompetitive business behavior. In
assessing potential barriers to entry or expansion, the question is only whether the barriers
created by the conduct increase the costs or difficulty of entry or expansion, regardless of
whether the conduct may also qualify as an abuse.

 Thus, the test for whether conduct creates barriers to entry or expansion is different from
the test for whether that conduct constitutes and abuse of dominance.

 The enterprise with excess capacity may deter entry by threatening to increase output in
response to entry or expansion, thereby lowering prices and making a competitor’s entry or
 expansion unprofitable. Excess capacity may be held for legitimate reasons (e.g., potential
increases in demand). As a result, the implications of excess capacity are assessed in light of
the incumbent’s past response to entry.

 An incumbent’s existing contracts may limit an entrants or expanding firms' ability to obtain
necessary supplies or to access necessary distribution. Especially in industries by significant
economies of scale, an incumbent may “lock up” a sufficient portion of suppliers or
distributors with long term contracts to render entry infeasible or excessively costly. The
assessment of an incumbent’s existing contracts considers the contracts duration, scope, the
amount of the market covered, and termination provisions.

 Vertical integration may further give the incumbent firm advantages other rivals, and thus
contribute to its dominant position . While there may be nothing inappropriate or
questionable about such advantages, their existence can be relevant to the assessment to
dominance.

 A vertically integrated incumbent may have assured access to scarce inputs or distribution
systems, which entrants would have difficulty obtaining. In the extreme, an incumbent may
own the only source of an input. In either case, the incumbent could be able to block entry
by denying access.

 Fast Track Call Cab Private Limited v. ANI Technologies

 It was found that Ola had provided refunds, rewards, loyalty, and unfair discounts. The
Commission remarked that Ola’s conduct of giving large discounts to its customers and
rewarding its staff at the expense of incurring losses seems to be a well-planned strategy by
the firm to exclude other market competitors from the particular market. This case
demonstrates that CCI’s stance on the security of regular taxi service providers has been
modified.

CASE STUDY AS DICSUSSED IN CLASS :-

1. Amir khan productions pvt ltd v UOI(As dictated in class)

2. MCX Stock exchange v NSE (As dictated in class)