PROHIBITION OF ABUSE OF

DOMINANT POSITION- SEC. 4 ,

COMPETITION ACT,2002

- AKHILA RANI,
Assistant professor, RCL
 DOMINANCE
• Dictionary Meaning of the word ‘Dominance’ :- The fact of being more
powerful, more important ,or more noticeable than other people or things

• The Competition Act does not prohibit a company or enterprise from

obtaining or maintaining a dominant position. But its ABUSE is prohibited.
• Abuse occurs when an enterprise uses its dominant position in the relevant
market in an exclusionary and /or exploitative manner
Types of Dominant Position

Exploitative such as excessive pricing

• Exploitative abuse enables the firm to increase its profits by exploiting
its market power
Exclusionary such as a denial of market access
• Exclusionary abuse is aimed at excluding or removing competitors from
the market.
Relevant Market (Sec.2(r))
• 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 ‘relevant market’ is characterized as ‘product’ and ‘geography’, in
other words, the applicable market recognizes the specific
item/administration or class of items created or benefits rendered by an
enterprise in a given geographic territory. 
Relevant Product Market ((Sec.2(t) and Sec.19(7))
• A market comprises all those products or services that are interchangeable
or are substituted by the consumer. Factors determining the relevant
product market are :

1) Physical characteristics or end-use of goods.

2) Price of goods or services.
3) Consumer preference
4) Exclusion of in-house producers.
5) Existence of specialized producers.
6) Classification of Industrial products.
•  Surinder Singh Barmi v The Board of Control for Cricket in India (BCCI),
Case No. 61/2010, it was held that the relevant market was settled on the
thought of demand substitutability of different types of amusement or
entertainment. It was held that a cricket match couldn’t be held to be
substitutable by some other game dependent on neither qualities nor the
intention of the person watching the cricket match.
Relevant Geographic Market ((Sec.2(s) Sec.19(6))
• A market comprising the area in which the condition of competition for supply
or demand of goods or services are distinctly homogeneous and can also be
distinguished from conditions prevailing in the neighboring areas
• Factors determining the relevant geographic market:
1) Regulatory trade barriers.
2) Local specialization requirements.
3) National procurement policies.
4) Adequate distribution facilities.
5) Transport cost.
6) Language.
7)  Consumer preference.
8) Need for secure or regular supplies or rapid after-sales service.
DOMINANT
POSITION :– LEGAL
DEFINITION
Explanation of Sec. 4 says – What is
Dominant Position??

(a)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 the relevant
market in its favour
 Section 4 :- Prohibition of 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 Position if an
enterprise or a group

Sec. 4 (2) (a) :-Directly or Indirectly imposes UNFAIR OR DISCRIMINATORY

(i) conditions in purchase or sale of Goods or Services , or

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

services
 A dominant enterprise by virtue of its position of strength may impose
unfair and discriminatory conditions of sale of goods or service which is
classified as an abuse under the Act.

 It may be noted here that the Competition Act does not define the term
unfair and discriminatory and has been left to the interpretation of the
Commission, NCLAT (earlier COMPAT ) and then Hon’ble Supreme Court
in view of the facts and circumstances of the Cases.

 However, the term “unfair trade practice” has been defined in the
Consumer Protection Act which essentially enlists a set of practices which
is being adopted for the purpose of promoting sale, use or supply of any
goods or provision of any service.
• Section 2(47) of the Consumer Protection Act, 2019 defines 'unfair trade
practice'.
• The definition of 'unfair trade practice' has been broadened to include
practices such as:
Manufacturing or offering spurious goods for sale or adopting deceptive
practices for providing service,
Not issuing proper cash memo or bill for the services rendered and the
good sold,
Refusing to withdraw, take back or discontinue defective goods and
services and refund the consideration taken thereof within the time
period stipulated in the bill or within 30 days if there is no such provision in
the bill,
Disclosing personal information of the consumer to any other person
• PREDATORY PRICING (ILLEGAL AND ANTI-COMPETITIVE)
• Predatory pricing is the Below Cost selling strategy adopted by the enterprise
who has a dominant position in the concerned relevant market.
• This pricing strategy means and includes the fixing the price of goods or service
at a very low rate
• On seeing the low price amount, the consumers will get automatically
attracted towards that product or services
• But later, when enterprise will get majority of customers of the concerned
relevant market by ousting out other competitions of similar goods or services,
that enterprise will start to increase the price of goods or services in order to
make good all the losses suffered by that enterprise in the initial time when it
sold out the goods or services at a very low rate of price amount compared to
other competitors belonged to the concerned relevant market
• The intention of enterpriser is always unfair and unethical while adopting the
predatory pricing method
• PENETRATION PRICING (LEGAL)
• This is the most tactic and strategic method of fixing or setting the
lowest price for the sale of goods or for service provisions adopted by
the enterprises in the beginning of the business to attract the customers
to buy the goods or to hire or avail the services
• In this method of penetration pricing , the enterprise sets or fixes the
price at a low rate for the products, compared to similar kind of products
or provision of services with a view to attract the customers.
• The main object of the enterprises while adopting the penetration mode
of price fixing is that, the enterprises anticipate the customers of other
enterprises will move on to the new enterprise who adopt the
penetration pricing method
• EXAMPLE

• Enterprise A, a manufacturer of pens is a dominant enterprise in the pen

market. Earlier it used to charge a price of INR 10 per pen .
• However, it has recently started selling its pen at a loss making price of INR 6
knowing that its competitors will not be able to match its price as their cost of
production is higher than Rs. 6.
• As a result of this, A's competitors would be forced to exit the market, after
which, A, as a monopolist, would be free to charge any price that it wants.
This is an example of a monopoly abusing its dominance by indulging in
predatory pricing.
• Bharti Airtel Ltd. Vs. Reliance Industries Ltd (CCI- case no. 3 of 2017 )
• The owner of Bharti Airtel, Sunil Bharti Mittal approached competition
Commission of India (CCI) against Mukesh Ambani, the owner of Reliance Jio.
The allegation was predatory pricing was adopted by Reliance Jio which is
against fair and healthy competition and the only objective of adopting
predatory pricing was to eliminate other competitor from the competition
field.
• Allegation by the Petitioner
• Airtel contended that Reliance Jio offered free services from the very
beginning of launching that is from 5th September in the year of 2016. This
free services amount to predatory pricing and which adversely affected all
other competitors in the same field like Airtel, Vodafone, Idea etc.
• And also alleged that Reliance Jio adopted predatory pricing strategy only
to drive out all other competitors from the concerned market
• Decision by CCI
• The allegation of predatory pricing raised by Airtel was rejected by the
Competition Commission of India by dictating that providing free
service is not at all anti-competitive in nature and also stated that
Reliance Jio is the new entrant in the concerned market where already
existed big players. So it is impossible to say that Reliance Jio abused
its dominant position as a new entrant won’t have that dominance in
the relevant market.
• CCI again quoted that the free services offer was being adopted by
Reliance Jio only to establish an identity in the market as it was new to
the concerned market of SIM business.
• C.Shanmugham & Others Vs. Reliance Jio Info Comm Limited (OP-1),
Department of Telecommunications (OP-2), TRAI (OP-3), (case no.98 of
2016 )
• In this case the petitioner is the informant.
• The informant has filed the petition on the basis of news , articles and
some other materials regarding the current affairs.
• The information contains that the Reliance JIO has abused the dominant
position by committing the offence of predatory pricing.
• RJIO has violated the section 4(2) of the Competition Act, 2002 by adopting
the predatory pricing strategy when they have launched the Jio sim with so
many attractive offers .
• Submission by the Informant
• The informant submitted that when Jio has been launched with unlimited
offers like free call offer, data package offers etc. all the customers who
were using other sims like Vodafone, Airtel, BSNL etc got shifted to use Jio
Sim.
• Jio launched so many offers only to eliminate other competitors from the
relevant market . Jio has adopted the pricing strategy of predatory pricing
which is violative of section 4 of the Competition Act,2002.
• Issues
• Whether Reliance Jio has violated section 4(2) of the Competition
Act,2002?
• Whether Reliance Jio is liable for the offence abuse of the dominant
position ?
Decision given by the Competition Commission of India (CCI)
• The CCI held that Reliance Jio has not violated the Section 4(2) of the
Competition Act,2002 .
• Only a dominant player in the relevant market can be held liable for abuse of
dominant position.
• Reliance Jio has only less than 7% share holdings in the concerned relevant
market and which is less than the shareholdings of other players in the
market like Vodafone, Idea, BSNL, Aircel etc. Being a non dominant player, it
can not said that Jio has adopted the predatory pricing strategy and is not
liable under Section 4(2) of the Competition Act, 2002
• Fast Track Call Cab Pvt. Ltd & Meru Travel Solutions Pvt. Ltd. Vs. ANI
Technologies Pvt. Ltd. (OLA)(CCI-case no.6 of 2015 )
• Summary of facts
• Bangaluru based taxi operators, Fast Track Call Cab Pvt. Ltd. And Meru
Travel Solutions Pvt. Ltd. had filed a complaint against ‘OLA’ before CCI
alleging the predatory pricing issues.
• i) OLA offers heavy discounts to the persons who hires the cab
• ii) At the same time, offers incentives to the cab drivers of OLA
• iii) OLA adopted predatory pricing for the services by abusing its Dominant
position.
• Finding of CCI
• On the basis of the complaint received ,Director General was directed to conduct a
detailed investigation into the matter on the basis of the investigation CCI rejected
Meru’s Allegation against OLA for predatory pricing on the basis of the following
findings

• i) CCI observed that the market in which OLA operates are devoid of entry barriers.
• Ii) CCI stated that not only ‘OLA’ but also ‘Uber’ is also holding the dominant position in
the cab market. As per Section 4(2) of the Competition Act it is evident and clear that in
one market there shall be only one dominant player.
• There cannot be the division of dominant power between two players unless and until
they form a combination under Section 5 of the Act.
• Thus the Act does not provide for more than one dominant players under Section 4 which
deals with abuse of dominant position.

• Hence CCI rejected all the allegation raised against OLA by the petitioners
 Sec.4 (2)(b) :- Putting Limitation or Restrictions

• Second category of abuse relates to a dominant enterprise limiting or

restricting

• Sec.4(2)(b)(i) • Sec.4(2)(b)(ii)

• Production of goods or • Technical or scientific

development relating to goods
• provision of services or
• or services
• market therefor; or
• to the prejudice of consumers
This category of abuse, which is practiced with an objective to
create artificial shortage in the market so that dominant
enterprise may raise prices of goods or service, or even in some
cases it may restrict the technical or scientific development
prejudice to the consumers (for example an enterprise may delay
or inhibit the production of innovative products if it is dominant as
there would be no competitive constraint
Sec.4 (2)(c) :- Denial of Market Access
• Sub-clause (c) to Clause (2) of Section 4 of the Act provides
that it would be an abuse of dominant position if an
enterprise indulges in practice or practices resulting in denial
of market access [in any manner].
• A dominant firm in order to maintain its dominance may indulge
in practices which results in denial of market access to its
competitors.
• For instance: it can create entry barriers like by pricing below
cost (predatory pricing).
• It can also indulge in lobbying with government to
create/modify regulations which may restrict new entry.
• Denial of market access by the dominant firm has a negative
impact on consumer welfare as it limits competitive prices and
product choices.
Sec.4(2) (d) :-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

One circumstance :- Tying and Bundling

 In this situation ,the buyer is obligated to purchase some goods which he

is not willing to purchase because manufacturer would not sell him the
goods he is willing to purchase without the goods tied.
• Another Circumstance
• A dominant firm imposes conditions which impose an unnecessary onus
on the other party to the contract which may be completely irrelevant.
• Example : Suppose Mr. B purchases a luxury flat from XYZ builders in a
high end residential accommodation.
• Also, XYZ has a dominant position in the high end residential
accommodation market.
• Further, XYZ imposes an unnecessary condition on Mr.B that he can't
rent his flat to students but he can rent it to families.
• This condition is completely irrelevant to the contract entered into and
is hence a violation of section 4 of the Act.
 In the Microsoft case(1990)
 The major allegation by the US Department of Justice against
Microsoft was it used its monopoly power to compel PC
makers to pay Microsoft not only when they sell PCs
containing MS Operating System but also when they sell PCs
containing non- MS Operating System.
 This practice helped MS to maintain its monopoly and
restricted competing operating system’s access to PC
Manufacturers.
 Microsoft abused its dominant position by exclusionary
licenses, raising prices, slow innovation and deprivation of
consumers of an effective choice among competing operating
systems.
 It is important to note here that the concept of tying has been referred to in both
Section 3 as well as Section 4 of the Competition Act, 2002. In section 3(4)(a),a
specific mention has been made to the term ‘tie-in arrangement’ which includes any
agreement requiring a purchaser of goods, as a condition of such purchase, to
purchase some other goods. Section 4 of the Act refers to this concept in sub-clause
2(d) of section 4 as “making 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”.
While the provisions may seem to be similar, the approach in handling these cases
are different
Sec.4 (2)(e) :- when a dominant enterprise uses its dominant position in
ONE RELEVANT MARKET, to enter into, or protect, OTHER relevant
market :- Leveraging

 It is not necessary for the dominance to exist in the same market

where the effects of the Anticompetitive conduct are felt

 There shall be an abuse of Dominant position if the Dominant

Enterprise uses its Dominant position in one market to enter or
protect another relevant market
• According to it, a dominant firm would condition the purchase of the
product by the consumer with another product. The two products would
have different relevant markets.

• Example :
• A printer manufacturer who is dominant in the printer market would
force the consumer to also buy ink toner from him. Since, printer and
toner are different products; they have a separate relevant market.
Consequently, the competition in the ink market gets affected as ink
producers would lose their customers to the printer manufacturer.
• CCI will look into following elements to determine whether an enterprise
enjoys Dominant position or not (Section 19(4))
(a) market share of the enterprise
• There is no clear-cut threshold at which a firm deemed to have or not the
significant market power.
• The authorities across the countries have taken a very wide and varied range
of market shares as indicators of dominance in various jurisdictions
• In Indian context, market share has to be considered in conjunction with
numerous factors given in Sec.19(4)
• Two commonly used measures for defining market share are Sales volume
(sales of the particular products in the relevant market) and Active stock
( volume terms)
• Market share is not a stand-alone factor
(b) size and resources of the enterprise
• It is also relevant to look at the firm's size in the relevant market relative to
its competitors. Eg:- MSME, MNC, Conglomerate

(c) size and importance of the competitors

• It is also relevant to look at the competitors’ size in the relevant market

(d) Economic power of the enterprise including commercial advantages over

competitors
• Commercial Advantage means that the Company is placed in a better
position (financial, economic, reputational or in any other way that is
beneficial) than its competitors
(e) vertical integration of the enterprises or sale or service network of such
enterprises
• Vertical integration refers to ‘where one company takes control over one or
more stages in the production process or supply chain’.
• Sales Network is also a relevant factor while determining dominance as it
confers the enterprise sustainable advantage over its rivals in terms of
supply chain and dealership networks amongst others
• For Example, Netflix's shift from licensing shows and movies to producing
its own original content

(f) Dependence of consumers on the enterprise

• In public utility, the dependence of consumers on an enterprise compared to
its rivals indicates a kind of dominance in the relevant market.
(g) monopoly or dominant position whether acquired as a result of any statute or
by virtue of being a Government company or a public sector undertaking or
otherwise
• The public sector companies do have an edge over new private sector entrants.
• They have inherent advantages of strong financial position, control of certain
networks, established relations with suppliers, and customers which may make
the entry for new entrants difficult.

(h) Entry barriers including barriers such as regulatory barriers, financial risk, high
capital cost of entry, marketing entry barriers, technical entry barriers,
economies of scale, high cost of substitutable goods or service for consumers
• An important factor in the assessment of dominance are barriers to entry, exit,
and durability in the relevant market.
• If entry barriers faced by the rivals are low, the undertaking which has a high
market share may not be able to continue its significant market power for long
(i) Countervailing buying power
• An enterprise may be constrained not only by actual & potential
competitors but the buyer's tendency to shift from their product/service
especially in a monopoly market.
• If there are competitors with adequate capacity to meet the demand of
buyers, then it have a considerable effect in the relevant market
• A strong buyer has the power to open the way for new entrants so as to
defeat the dominant enterprise
(j) market structure and size of market
• Market structure which is characterized by a sole supplier of goods and services
either on a standalone basis or by virtue of common ownership which makes
conditions conducive to exercise of market power affecting competition,
consumers & market itself.
• Further, the smaller the size of the market, the greater the likelihood of
dominance.

(k) social obligations and social costs

• Social cost means a bad effect that a business, activity, etc. has
on people, society, or the environment
• Social obligation is the requirement that organizations have a positive impact
on people and planet
• This factor of consideration gives CCI the flexibility to consider social obligations
performed by an entity like employment capacity and consumer welfare.
(l) relative advantage, by way of the contribution to the economic
development, by the enterprise enjoying a dominant position having
or likely to have appreciable adverse effect on competition
• Positive conducts on part of an enterprise can weigh the scales in favor
of it while determining dominance- pro-development approach or rural
reach.

(m) any other factor which the Commission may consider relevant for
the inquiry
• This provision gives CCI the power to include any other factor it deems
fit for the purpose of the inquiry.
It is a natural tendency of human being to Abuse the Dominant
position they have as says- “ Power Corrupts while Absolute
Power corrupts Absolutely”
We have Competition Act ,2002 & CCI to
Prohibit and Regulate Abuse of Dominance
Thank You