Competition Law: Dominant Position and its Abuse: Identification of

Abusive Use of Dominant Position

Dr. Vijay Kumar Singh
Associate Professor, School of Corporate Law, IICA
vrsingh.vk@gmail.com

Module written for e-Pathshala, MHRD Project NME-ICT of Government of India,

http://epgp.inflibnet.ac.in/view_search.php?&category=5656&ft=et

Keywords: dominance, abuse, predatory pricing, denial of market access

Module 18
To identify the abuse which an enterprise may resort to while in position of dominance. Essential
conditions for those abuse.

Online Recorded Video of this module is also available at:

https://www.youtube.com/watch?v=Ahv76Y5W8wo

Introduction

Under the present system of competition laws in India, the dominance per se is not bad, what is bad is
the abuse of this dominant position.

Learning Outcome

This module would enable the learners to:

 Enumerate the conduct which would be termed as abuse under Competition Act, 2002.
 Explain the concept of ‘unfair and discriminatory’ condition in purchase and sale of goods or
services.
 Explain the concept of ‘predatory pricing’.
 Explain the concept of ‘leveraging’.

Important Note: The quotes from the orders of CCI has to be read with the orders in appeal under
section 53-B to Competition Appellate Tribunal (COMPAT) and thereafter to Hon’ble Supreme Court
under section 53-T. Please update yourself with the latest status of the case as this module gives you
the status as on date of the module.

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Electronic copy available at: https://ssrn.com/abstract=2973781

18. Identification of Abusive Use of dominant position

Once the dominance of an enterprise is established, the next step is to examine the conduct of the
dominant enterprise and to see whether that falls under the categories of abuse mentioned under the
Act. An abuse of dominant position may be generally categorised into ‘exclusionary’ (an upstream
dominant enterprise supplies the input to its downstream affiliate at lower cost than its downstream
rival – leading to price squeeze, causing a competitive disadvantage to the downstream rival, for e.g.
if the input cost charged to the downstream affiliate is Rs. 100 to the downstream rival it is Rs. 130,
thus there is an inherent competitive disadvantage of Rs. 30 to the rival firm) and ‘exploitative abuses’
(dominant player charges excessive price from consumers or exploits them due to its dominance).
However, the Competition Act in India does not make such distinction, though a reference was made
by Raghavan Committee1.

The concept of abuse is an objective concept as held in the case of Hoffman La Roche by ECJ2,
“The concept of abuse is an objective concept relating to the behavior of an undertaking in a dominant
position which is such as to influence the structure of a market where, as a result of the very presence
of the undertaking in question, the degree of competition is weakened and which, through recourse to
methods different from those which condition normal competition in products or services on the basis
of the transactions of commercial operators , has the effect of hindering the maintenance of the degree
of competition still existing in the market or the growth of that competition.” Section 4 of the Act
provides for five categories of abuses which may be exploitative or exclusionary. Each of these
categories has been discussed below.

18.1 Abuse Relating to Conditions of Purchase or Sale and Price in purchase or sale of goods
or service
A dominant enterprise or group would be held to abuse its dominant position if it
(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.

Thus, the abuse may be in relation to the conditions in purchase or sale of goods or service or price in
such purchase or sale including predatory pricing. Such an abuse must be by a dominant enterprise or
group. However, if the discrimination is for the purpose of meeting competition, it is excused3 (for
example the situation of price war between competitors or a reduced price for penetrating the market
or introduction price may be an example).

18.1.1 Unfair and Discriminatory Conditions:

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, 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, 1986 which essentially enlists a host of practices which is being adopted
for the purpose of promoting sale, use or supply of any goods or provision of any service4.

CASES

A. DLF Case: In this Case5, CCI found the conditions of the Apartment’s Buyers
Agreement to be in violation of Section 4(2) (a) (i), i.e. to be unfair and discriminatory and a penalty
of Rs. 630 crore was imposed by CCI on DLF (7% of the average turnover for the last preceding three
years). The moot point in this case was the competition concern of a dominant player abusing its
dominant position by imposing blatantly unfair conditions in the “agreement” with its customers and
bind them in such one-sided contractual obligation6. CCI held the conduct of DLF in this regard as
‘unfair’ and even exploitative. While finding this, CCI examined various clauses of the Apartment

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Electronic copy available at: https://ssrn.com/abstract=2973781

Buyers Agreement of DLF and found them to be unfair and discriminatory like unilateral changes in
agreement and suppression of terms by DLF without any rights to the allottees, DLF’s unilateral right
to change the super area without concurrence of allottees, allottees have no exit options, punitive
penalty for default by allottees, insignificant penalty for DLF’s default, etc.7

It is pertinent to mention here that in this case the CCI not only imposed a penalty on DLF but also
highlighted the need for a real estate regulation and accordingly directed the Secretary to inform all
concerned:
“12.111: The examination of this case has brought forth several areas of concern pertaining to
the housing sector in India. The Commission feels that although there is a plethora of laws,
there is no proper regulation of the real estate sector, particularly the housing sector. In order
to promote overall consumer welfare, to ensure free and fair competition in real estate
residential market and to set standards of conduct of enterprises engaged in similar nature of
trade, the Commission therefore makes a strong recommendation to the Central Government
and all State Governments to come out with real estate regulations at the earliest for ensuring
overall consumer welfare and to discourage unfair trade practices that seem prevalent in the
sector.”

After-Market Abuse argument of Member (R): Following the principle laid down in the Eastman
Kodak Case in US (US 451-1992), it was held that there are two markets in the real estate case i.e. the
first market where the consumer enters into an agreement with the builder and the second market is
the aftermarket after it has enter into an agreement with the builder as a locked-in consumer8.

While DLF was directed to modify the unfair and discriminatory clauses in this case by CCI, at the
direction of Hon’ble COMPAT, CCI vide its supplementary order dated 03.01.2013 provided for the
modified clauses9. In DLF Case, the COMPAT has upheld the findings of the Commission10 as
regards abuse of dominant position by DLF and so also the penalty amount. However on a technical
point COMPAT has observed that the CCI could not have examined the clauses of the Apartment
Buyers Agreement as Section 4 was not in force on the date of the agreement. The decision of
COMPAT is now in appeal before Hon’ble Supreme Court.

B. Pragati Maidan Case: Another case11 of unfair and discriminatory condition imposed by a
dominant player is relating to the Pragati Maidan in Delhi. This case was against the Indian Trade
Promotion Organization (ITPO) for abusing its dominant position in the relevant market for
“provision of venue for organizing international and national exhibitions, trade fairs (events) in
Delhi”. It was held in this case that Pragati Maidan is the only established venue for holding
international and national trade fairs/exhibitions (events) in Delhi and ITPO as venue provider for
holding events in Delhi has absolute control and dominance. It was further found that ITPO has
abused its dominant position by imposing unfair and discriminatory condition on the third-party event
organisers for example the time gap restriction between two “third party events” was 15 days before
and after the event whereas in case of ITPO’s own organised events/exhibitions, the time gap
restriction was 90 days before and 45 days after the event (which was amended to 90 days before and
after the event in 2011). This was held to be unfair and discriminatory by CCI12. A penalty of 2% of
the average turnover of preceding three years was imposed on ITPO which amounted to Rs. 6.75
crores.

C. Coal India Case: CCI passed a common order13 against Coal India Limited and its
subsidiary finding it to abuse its dominant position by imposing unfair/discriminatory conditions and
indulging in unfair/discriminatory conduct in the matter of supply of non-coking coal to power
producers by way of unequal Fuel Supply Agreements (FSAs) imposed upon the purchasers of coal
who do not have any option but to approach Coal India for supply of coal. While finding the abuse
under section 4(2)(a)(i) of the Act, CCI found the following specific clauses to be unfair and
discriminatory14:
(i) Clauses relating to the sampling and testing procedure.

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 (ii) Clauses relating to charging the transportation and other expenses from the buyers on
supply of ungraded coal and the clauses relating to DDQ.
(iii) Clauses relating to capping on compensation for supply of stones for new power
producers.
(iv) Clauses relating to review and termination provisions of the agreement.
(v) Discrimination between existing and new power producers with respect to review of
grade.
(vi) Clauses relating to force majeure for new power producers.

A penalty of Rs. 177305 crores, i.e. 3% of the average turnover of last preceding three years was
imposed on Coal India. The matter is under appeal before COMPAT. As regards promoting
competition in this sector and requirement of a regulator, CCI observed:
“However, there is an imperative need to carry forward this reform momentum further by
restructuring the sector by introducing more number of players so that it can reduce the
dominance of any one player and can facilitate competition. Bringing the coal sector under
the independent regulatory oversight would only help if there are enough players in the
market.”

D. Adani Gas Case: Similar to Coal India case (supra), CCI found that Adani has imposed
unfair conditions on the buyers by way of Gas Supply Agreement (GSA), for example “likely
termination of contract by the opposite party on account of failure to off-take 50% or more of the
cumulative DCQ by the buyer during a period of 45 consecutive days as against the longer period
available to the opposite party from GAIL.” CCI imposed a penalty of 4% of the average turnover,
i.e. Rs. 2567 lakhs on Adani in this case15 along with the orders to cease and desist and modification
of the unfair and discriminatory clauses of the GSA.

The aforesaid cases provide adequate example as to the approach of dealing with the unfair and
discriminatory conditions imposed by a dominant enterprise in India. It appears from the
interpretation of the Commission’s order that the dominant enterprise or group in India has a special
responsibility to discharge and cannot behave as they like which leads to detriment of the market.

18.1.2 Unfair and Discriminatory Pricing:

A firm’s freedom to price its goods cannot be challenged and that freedom has been recognised as an
essential element of doing business; however in what situations the pricing becomes unfair and
discriminatory is the question which needs to be determined by the competition agencies. The
Competition Act recognises the aforesaid exception in its explanation. Analysis of whether a
dominant undertaking’s pricing practices are abusive typically requires consideration of its costs16.
Now, an abuse may occur when the price charges and the costs incurred is excessive, it lacks cost
justifications, and when it is charged below cost. One has to encounter the concepts like, fixed costs,
sunk cost, marginal cost, variable cost, avoidable cost, average variable cost (AVC), average
avoidable cost (AAC), long-run incremental cost (LRIC), long run average incremental cost (LRAIC),
average total cost (ATC), and stand alone cost, while appreciating the concept of cost.

As regards the pricing issues, the debate rovers around the following key issues17:
(i) whether and under what market conditions pricing by dominant firms warrants
antitrust intervention
(ii) conceptually what constitutes ‘unfair’ or ‘excessive’ price
(iii) the practical challenges in applying the various tests that have been proposed by
various commentators for assessing unfairness of prices and
(iv) the choice of efficient remedies.

What amounts to unfair and discriminatory pricing under the Indian Competition Law is a question of
debate and is not yet settled. However, the approach of CCI reflects that it is wary of the fact that
unfair pricing cases may cause a distortion in the markets and ultimately harm the consumers,

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industry and economy. In MCX-NSE Case18 the concept of ‘unfair pricing’ was in issue wherein CCI
held ‘predatory price’ to be a subset of ‘unfair price’ and held that ‘zero pricing’ by NSE in ‘currency
derivative market’ was annihilating or destructive pricing as it was beyond the parameters of
promotional or penetrative pricing19. CCI further directed NSE to maintain separate accounts for each
segment of the market and modify its zero pricing policy.

18.1.3 Predatory Pricing – Explanation (b) to Section 4 defines predatory pricing as “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.” Predatory pricing refers to conduct, where a dominant undertaking incurs
losses or foregoes profits in the short term with the aim of foreclosing its competitors. Broadly
speaking, it consists in one competitor setting a price which is “too low”, such that competitors find
themselves unable to compete at that price20. Determination of cost becomes an important and
relevant factor for finding out the allegation of abuse by way of predatory pricing. The Competition
Commission of India (Determination of Cost of Production) Regulations, 2009 is the relevant
regulation in this regard21. As per the regulation, unless justified, selling a product by a dominant
enterprise below the cost of production (to be taken as average variable cost generally) would be
predatory pricing. However, no ‘strait-jacket’ formula can be laid down, and each case would depend
on its own facts and circumstances. While there are different standards of ‘predation test’ in US and
EU, India has not examined any of them in a case so far.

18.1.4 Excessive Pricing – While EU in its famous United Brand’s case22 has held ‘excessive
pricing’ to be an abuse of dominant position, in India the concept of excessive pricing have not been
taken up by CCI specifically. By and large the ‘price setting’ is not considered as the job of the
competition regulator, as there are Sectoral Regulators with expertise to do that (for e.g. TRAI in
telecom sector). Excessive pricing is considered an exploitative abuse and is distinguished from the
exclusionary abuses as “under exploitative abuses, it is the high price itself that is deemed
problematic, whereas under exclusionary conduct high or higher prices tend to be the result of the
exclusionary practise.” South African Competition Act defines excessive pricing as “a price for a
good or service which – (i) bears no reasonable relation to the economic value of that good or service;
and (ii) which is higher than the economic value referred to above23. The concept of ‘economic value’
is borrowed from the EU United Brand’s case which is generally considered as the notional price of
the goods or service under assumed conditions of long-run competitive equilibrium24.

In India, recently, the unfairness in pricing has definitely been a concern and the latest cases involving
the violation of FRAND commitments (A SEP holder is under an obligation to license the SEPs to
every party under Fair, Reasonable and Non-Discriminatory terms) by Ericsson has been subject of
examination by CCI25. The cases are still under investigation and may involve issues like excessive
and/or unfair pricing.

18.1.5 Royalty Rebates and Margin Squeeze – In US and EU, the competition agencies have found
in a number of cases fidelity or loyalty rebates to be abusive. For example in Intel Case, EC imposed
a fine on Intel for abuse of dominant position in the market for computer processing unit (CPUs) by
offering rebates to the computer manufacturers conditional upon them purchasing all or the great
majority of their CPUs from it26. In the case of Kapoor Glass, CCI referred to the practice of EU
condemning the discount policy of a dominant enterprise which has exclusionary and exploitative
effect (referred to Hoffman La Roche Case), and held that the discount policy of the OP is both unfair
and discriminatory and is violative of provisions of section 4(2)(a) (i) and 4 (2)(a)(ii) of the Act,
which prohibits any dominant enterprise from imposing directly or indirectly unfair or discriminatory
conditions and prices in sale of goods27.

18.2 Putting Limitation or Restrictions

Second category of abuse relates to a dominant enterprise or group limiting or restricting28:
(i) Production of goods or provision of services or market therefor; or

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

This category of abuse, which is an exclusionary abuse, may be 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 to the prejudice of
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, for e.g. initial period of automobile sector in
India may be considered when the only car manufacturer was Hindustan Motors, Ambassador was the
only model produced however, the competitive constraints at present forces every car manufacturer to
come up with new models.)

In the Kapoor Glass case (supra) CCI found that the practice of Schott Glass to “ensure that the
converters do not switch over to the other suppliers in upstream market including imports, limits the
overall market of tube glass and is violative of provisions of section 4(2)(b)(i) of the Act, which
prohibits a dominant enterprise from engaging in any practice which limits or restricts the market29.”
In this case, there were two markets identified by CCI, i.e. upstream market of borosilicate clear glass
in which Schott was found dominant, which was to be used for producing borosilicate glass ampules
in the downstream market by players like Kapoor Glass and also Schott Kaisha (a downstream entity
of Schott itself).

18.3 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 or group indulges in practice or practices resulting in denial of market access
[in any manner]. In a recent case, CCI has ordered an investigation forming a prima facie opinion
that “JCB by abusing their dominant position in the relevant market sought to stifle competition in the
relevant market by denying market access and foreclosing entry of ‘Bull Smart’ in contravention of
the provisions of Section 4 of the Act30”. This case touches upon the famous ‘Essential Facilities’
doctrine by which the competition agencies have granted access to an essential infrastructure (facility)
of a competitor on reasonable terms if that facility could not be replicated31. The Competition Act
does not define the term ‘essential facility’, however, the same has been defined in the South African
Competition Law as “an infrastructure or resource that cannot reasonably be duplicated, and without
access to which competitors cannot reasonably provide goods or services to their customers32.”

In the case of Arshiya Rail33, CCI refused to invoke the ‘essential facility doctrine’ observing as
follows:
“the essential facility doctrine is invoked only in certain circumstances, such as existence of
technical feasibility to provide access, possibility of replicating the facility in a reasonable
period of time, distinct possibility of lack of effective competition if such access is denied and
possibility of providing access on reasonable terms. In the present case, we are of the view
that there are no technical, legal or even economic reasons as to why other CTOs should not
be creating their own terminals or similar facilities. As set out in the Indian Railways
(Permission for operators to move container trains on Indian Railways) Rules, the Model
Concession Agreement (MCA) and Gazette Notification No 458 dated 26/09/2006, CTOs are
obligated to build their own terminals at their cost.”

Draft National Competition Policy document published for comments by MCA enlisted ‘access to
essential facilities’ as one of the competition policy principles in the following words34:
“Third party access to ‘essential facilities’, i.e. requiring dominant infrastructure owners to
grant to third parties access (e.g., electricity, communications, gas pipe lines, railway tracks,
ports etc.) to their infrastructure on agreed terms and conditions and at regulated prices,
aligned with competition principles.”

18.4 Tying and Bundling

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By virtue of a position of dominance when an enterprise or group 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, would be
considered an abuse35. This particular category of abuse has been considered in EU in a number of
cases like Microsoft Media Player Case wherein tying of Windows Media Player to Windows was
considered as abuse of dominant position36. CCI examined this provision in the case of Kapoor Glass
and found the conduct of Schott Glass to be abusive on two counts that is making supplementary
obligations on purchasers of clear tubes to purchase amber tubes and secondly providing
discriminatory discounts to its own downstream entity as compared to its rival downstream entity37.

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. Especially, in case of tie-in arrangement under section
3(4) the analysis is more detailed as the factors of establishing AAEC has to be satisfied, however, in
case of section 4 there is no requirement of establishing AAEC.

In a tying case 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.
An extreme case of tying would be ‘full-line forcing’ in which the buyer of a product is coerced by his
supplier to buy the complete range of its products. These abuses have a foreclosure effect on the
markets as a part of market is foreclosed for other competitors. Under MRTP Act, this has been dealt
with under Restrictive Trade Practices38 and one of the famous examples can be insistence of a gas
distributor to buy a gas stove as a condition to the gas connection39. CCI examined an alleged tie-in
arrangement in the case of Tata Sky40 under section 3(4), however, found no violation.

18.5 Leveraging
The last form of abuse is when a dominant enterprise or group uses its dominant position in one
relevant market to enter into, or protect, other relevant market 41. While the other categories of abuse
in Indian Competition law seems to be taken from the EU law, this category of abuse is not
specifically mentioned in the provisions of the EU law, however, while interpreting the case of
Tetrapak case recognised this form of abuse42. In MCX-NSE Case, CCI had found that NSE has used
its position of strength in the non CD segment to protect its position in the CD segment to be in
contravention of section 4(2) (e) of the Act43.

In Float Glass case44, the allegation of leveraging was not found to be correct by CCI. In this case,
the allegations were that the market power of the Saint Gobain in the architecture glass (reflective)
was abused in the other glass market. Leveraging Monopoly in Amber segment to make sale of
amber tubes contingent upon purchase of clear tubes was in issue in Kapoor Glass case. CCI found
that “conduct of OP, who is in dominant position in the upstream relevant market of tubes, has
contributed to the lessening of level of competition in the downstream market in the favor of Joint
Venture, the Schott Kaisha. The Commission accordingly holds that the said act on the part of OP
together with other group concerns attract the provision of Section 4 (2) (e) of the Act, which
stipulates that no enterprise will use its dominant position in one market to enter into or protect other
relevant market45.”

18.6 Remedies/Penalty
After an abuse of dominance is established under Section 4 of the Act, CCI may pass the following
orders under section 27 of the Act:
 Order discontinuance of such abuse of dominant position by way of a cease and desist order.

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  Impose a penalty which shall not be more than ten percent of the average turnover for the last
three preceding financial years.
 Pass such other orders or issue such directions as it may deem fit.

Further, under section 28 of the Act, CCI may also direct division of an enterprise enjoying dominant
position to ensure that such enterprise does not abuse its dominant position. Such an order by CCI,
which has to be in writing, may provide for the following:
(a) the transfer or vesting of property, rights, liabilities or obligations;
(b) the adjustment of contracts either by discharge or reduction of any liability or
obligation or otherwise;
(c) the creation, allotment, surrender or cancellation of any shares, stocks or securities;
(d) …46
(e) the formation or winding up of an enterprise or the amendment of the memorandum
of association or articles of association or any other instruments regulating the
business of any enterprise;
(f) the extent to which, and the circumstances in which, provisions of the order affecting
an enterprise may be altered by the enterprise and the registration thereof;
(g) any other matter which may be necessary to give effect to the division of the
enterprise.

The Commission may, during the pendency of an inquiry into abuse of dominant position, if the
conditions of Section 33 of the Competition Act, 2002 are met, temporarily restrain any party from
carrying on the offending act until conclusion of the inquiry or until further orders.

Other than the above, the Central Government or a State Government or a local authority or any
enterprise or any person may make an application under section 53-N of the Act to COMPAT
requesting to pass an order for the recovery of compensation from any enterprise for any loss or
damage shown to have been suffered, by the Central Government or a State Government or a local
authority or any enterprise or any person as a result of any contravention of the provisions of Chapter
II (which includes section 4), having been committed by enterprise.

SUMMARY
An analysis of the aforesaid provisions relating to the abuse of dominance spells out the evolution of
the concept of ‘dominance per se being not bad’ rather ‘abuse of that dominance’ being bad in law.
This development is in line with the present corporate milieu which essentially does not require a lot
of restrictions on the growth of enterprise or groups or markets. The Competition Act in India draws
upon the international developments as well as settled jurisprudence which is evident from the fact
that it clearly outlines the factors to be considered while determining the relevant market (both
product and geographic), dominance of an enterprise, as well as enumerates the kinds of abuses.
Further some of the abuse is defined specifically like predatory pricing.

While CCI has not yet got an opportunity to fully interpret the provisions relating to abuse of
dominant position, in coming years definitely the cases would come to do that, the significant
development lies at the appellate level when the matter reaches the Competition Appellate Tribunal
(COMPAT) and thereafter Supreme Court in appeals and the jurisprudence on these issues gets settled
in India. Apart from the judicial machinery provided under the Competition Act, 2002, several High
Courts have also interpreted the provisions of the Competition Act which requires an analysis and
appreciation47.

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Quadrant III: (Learn More / Source for Further reading / Web Resources):

Did you Know?

Description Image Source

Member R Prasad has given the maximum
number of dissenting and supplementary Orders of the Commission available at
opinions in CCI
The maximum penalty imposed by
http://www.cci.gov.in/May2011/OrderO
Competition Commission of India in an Abuse
fCommission/27/592012.pdf (Case 3, 11
of Dominance Case was against Coal India,
and 59 of 2012 decided on 09.12.2013).
i.e. Rs. 1773.05 crores.
http://eur-lex.europa.eu/legal-
content/EN/TXT/HTML/;ELX_SESSIO
Clause (e) of Section 4 of the Competition NID=45pDTv9TSHPpNy6bqlnvMh1LY
Act, 2002 is inspired from the Tetrapak fxkLKBmb5XLPSXpJqn2YpP1DWLG!
Decision of EU -
778669188?isOldUri=true&uri=CELEX
:61994CJ0333
American Bar Association section of Antitrust
Law publishes the latest developments on
http://shop.americanbar.org/eBus/Store/
Antitrust Laws in US and is a kind of
ProductDetails.aspx?productId=213824
restatement. The latest version (7th ed) is
published in 2012.
On European Law: Richard Wish’s EU
http://ukcatalogue.oup.com/product/978
Competition Law is now published in Indian
0199586554.do
Edition, (7th ed) published by Oxford

Glossary

Starting Term Definition Related Term

Character
Abuse of
Abuse of dominance is the conduct which is
Abuse of Dominant
A prohibited by law by a dominant enterprise.
Dominance Position
For example unfair and discriminatory pricing.
Monopolisation
It is a power and influence over others. In
competition law context, dominance relates to
D Dominance this power and influence of an enterprise or Dominant
group in relevant market or on its competitors
and/or consumers
An infrastructure or resource that cannot be
reasonably duplicated, and without access to
E Essential Facility which competitors cannot reasonably provide
goods or services to their customers. (South
African Competition Act)
Conduct that creates or maintains monopoly
power by disadvantaging and harming
Exclusionary
E competitors (excluding the competitors form
Conduct
relevant market from competing) These cause
indirect harm to consumers.
Exploitative Conduct that exploits the consumer because
E
Conduct there are no competitors in the market or the

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 exploiter is dominant enterprise (for e.g.
excessive prices). These cause direct harm to
consumers.
Attempts by a dominant firm or group of
relatively large firms to maintain or increase
market control through various anticompetitive Abuse of
M Monopolisation
practices such as predatory pricing, pre- Dominance
emption of facilities, and foreclosure of
competition.
Monopoly is a situation where there is a single
M Monopoly seller in the market.

A monopsony consists of a market with a

M Monopsony single buyer.

The ability of a firm (or group of firms) to raise

and maintain price above the level that would
M Market Power Dominance
prevail under competition is referred to as
market or monopoly power.
Monopolistic competition describes an industry
structure combining elements of both
Monopolistic
M monopoly and perfect competition. Firm is
Competition
somewhat dominant in relation to its product
(brand) in spite of there being many substitutes.
A natural monopoly exists in a particular
market if a single firm can serve that market at
lower cost than any combination of two or
N Natural Monopoly more firms. Natural monopolies are thought to
exist in some portions of industries such as
electricity, railroads, natural gas, and
telecommunications.
An oligopoly is a market characterized by a
small number of firms who realize they are
O Oligopoly interdependent in their pricing and output
policies. The number of firms is small enough
to give each firm some market power.
This is a pricing strategy where the price of a
product is kept very low (generally below the
P Predatory Pricing
cost of production) to drive out the existing or
potential competitors out of the market.
The starting point in any type of competition
analysis is the definition of the "relevant" Relevant
market. There are two fundamental dimensions Product Market
R Relevant Market of market definition: (i) the product market, and Relevant
that is, which products to group together and Geographic
(ii) the geographic market, that is, which Market
geographic areas to group together.
Monopolization
It is a conduct that does not require an
U Unilateral Conduct or abuse of
agreement between two or more parties.
dominance

Web Links

http://www.cci.gov.in/May2011/Advocacy/AOD.pdf

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http://www.cci.gov.in/images/media/Advocacy/CompetitionAct2012.pdf
http://www.cci.gov.in/May2011/Advocacy/FAQ.pdf

Points to Ponder

Sl. Points to Ponder

No.
1. Issues considered in DLF Case by CCI and COMPAT and what is the difference in their
approach?
2 In East Line Projects Pvt. Ltd. v. Dr. B. Borooah Cancer Institute Guwahati AIR 2005 Gau 5
A condition in a tender to establish a pharmacy was challenged on the ground that “the
stockist enjoy a dominant position and if he is allowed to compete with the distributor or the
retailer, it will amount to abuse of dominant position which will be violative of the provisions
of Section 4 of the Competition Act, 2002”. However, the Court found that “considering the
avowed object for which the pharmacy is going to be established, the Competition Act, 2002
does not apply in the matter.” – How far is this definition consistent with the concept of
enterprise under the Competition Act, 2002?
3. Issues considered in Kapoor Glass Case by CCI and subsequent reversal by COMPAT.
4. Review of Apartment Buyers Agreement by CCI on directions of COMPAT and subsequent
consideration of the same as only an obiter by COMPAT?
5. Issues raised in MCX-NSE Case?
6. What is the most important consideration in AOD cases before CCI?

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Quadrant-IV (Assessment / Evaluation)

1. The cost standard under the CCI Cost Regulation is generally taken as:
(a) Average Variable Cost
(b) Average Total Cost
(c) Average Avoidable Cost
(d) Long-Run Incremental Cost

2. Adani case related to abuse of dominant position with reference to:

(a) Fuel supply agreements
(b) Gas supply agreements
(c) Apartment buyers agreement

True or False

3. Predatory pricing is a form of exploitative abuse under the Competition Act, 2002.

4. Leveraging dominant position in one market into another market is considered as an abuse
under the Competition Act, 2002.

1
Report of High Level Committee on Competition Policy and Law: Chaired by SVS Raghavan, 2000, Para
4.5.8,
<http://www.globalcompetitionforum.org/regions/asia/India/Report_of_High_Level_Committee_on_Competitio
n_Policy_Law_SVS_Raghavan_Committee29102007.pdf> accessed June 9, 2014
2
Case 85/76, Hoffmann-La Roche & Co. AG v Commission, [1979] ECR 461, p. 541
3
Explanation to Section 4(2)(a)
4
Section 2(r) of the Consumer Protection Act, 1986
5
Belaire Owner’s Association against DLF Limited, Case 19 of 2010 (decided on 12.08.2011),
<http://www.cci.gov.in/May2011/OrderOfCommission/DLFMainOrder110811.pdf > accessed July 21, 2014.
CCI has passed similar orders in Case 18 of 2010, of DLF Park Place Residents Association against DLF Home
Developers (decided on 29.08.2011)
<http://www.cci.gov.in/May2011/OrderOfCommission/DLFParkMainOrder300811.pdf> accessed July 21,
2014, Case 46 of 2012 – Dinesh Trehan v. DLF Ltd.
<http://www.cci.gov.in/May2011/OrderOfCommission/462012.pdf> accessed July 21, 2014, Case 67 of 2010 –
Magnolia Flat Owner’s Association against DLF Universal Ltd.
<http://www.cci.gov.in/May2011/OrderOfCommission/MagnoliMainjan2012.pdf> accessed July 21, 2014
6
Id. para 12.103.
7
Id. para 12.90.
8
Supplementary Order by Member (R),
<http://www.cci.gov.in/May2011/OrderOfCommission/DLFSuppOrder160811.pdf> accessed July 21, 2014
9
<http://www.cci.gov.in/May2011/OrderOfCommission/192010S.pdf> accessed July 21, 2014
10
DLF v. CCI and 3 others, Para 123, <http://compat.nic.in/upload/PDFs/mayordersApp2014/19_05_14.pdf>
accessed July 21, 2014
11
Indian Exhibition Industry Association against Ministry of Commerce and Industry, Case 74 of 2012 (decided
on 03.04.2014), <http://www.cci.gov.in/May2011/OrderOfCommission/27/742012.pdf > accessed July 21, 2014
12
Id. para 26
13
Maharashtra State Power Generation Company and Gujarat State Electricity Corporation Limited against
Mahanadi Coalfields Limited, Western Coalfields, South-eastern Coalfields and Coal India Limited and others,
Case 03, 11 & 59 of 2012 (decided on 09.12.2013): 2013CompLR910(CCI),
<http://www.cci.gov.in/May2011/OrderOfCommission/27/592012.pdf> accessed July 21, 2014
14
Id. Para 252.
15
Faridabad Industries Association (FIA) v. M/s Adani Gas Limited, Case 71 of 2012 (decided on 03.07.2014)
<http://www.cci.gov.in/May2011/OrderOfCommission/27/712012.pdf> accessed July 21, 2014
16
Whish, Richard, at p. 716.

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17
OECD Report on Excessive Pricing: Pages from India 335-343 DAF/COMP(2011)18,
<http://www.oecd.org/daf/competition/abuse/49604207.pdf> accessed July 26, 2014
18
MCX Stock Exchange against National Stock Exchange of India Ltd. (NSE) Case 13 of 2009 (decided on
23.06.2011), 2011CompLR0129(CCI),
<http://www.cci.gov.in/May2011/OrderOfCommission/MCXMainOrder240611.pdf> accessed July 21, 2014.
This order of CCI has been upheld by COMPAT recently on August 5, 2014,
http://compat.nic.in/upload/PDFs/augustordersApp2014/05_08_14.pdf> accessed August 6, 2014
19
Id. para 10.70, 10.76 and 10.77
<http://www.cci.gov.in/May2011/OrderOfCommission/MCXMainOrder240611.pdf> accessed July 21, 2014
20
Id., see Para 8.4 for an analysis of the concept of predatory pricing by CCI including a comparative analysis of
the term in US and EU
21
<http://www.cci.gov.in/images/media/Regulations/cost_pro.pdf?phpMyAdmin=NMPFRahGKYeum5F74Ppst
n7Rf00> accessed July 21, 2014
22
“Charging a price which is excessive because it has no reasonable relation to the economic value of the
product supplied would be such an abuse.” at para 250. Also see Amitabh Kumar, ‘Excessive Pricing – An
Abuse of Dominance’, Competition Law Reports (Jan-Feb 2011) B48. OECD Policy Roundtable on Excessive
Prices: DAF/COMP(2011)18, <http://www.oecd.org/regreform/sectors/49604207.pdf> accessed July 21, 2014
23
Competition Act, 1998, South Africa, Section 1(1) (vii).
24
Competition Appeal Court of South Africa, Mittal Steel Case, 70/CAC/Apr07, §40 – This requires the
assumption that, in the long run, firms could enter the industry in the event of a higher than normal rate of return
on capital, or could leave the industry to avoid a lower than normal rate of return on capital. It does not imply
perfect competition in the short-run, but rather competition that would be effective enough in the long run to
eliminate what economists refer to as ‘pure profit’ – that is a reward of any factor of production in excess of the
long-run competitive norm, which is relevant to that industry or branch of production.”
25
Case 50 of 2013 (Micromax against Ericsson)
<http://www.cci.gov.in/May2011/OrderOfCommission/261/502013.pdf> accessed July 21, 2014 and Case 76 of
2013 (Intex against Ericsson) <http://www.cci.gov.in/May2011/OrderOfCommission/261/762013.pdf.>
accessed July 21, 2014 (in both these cases investigation has been ordered on the alleged grounds of abuse of
dominant position by Ericsson in imposing discriminatory royalty rates in contravention of the agreed FRAND
terms.)
26
<http://europa.eu/rapid/press-release_IP-09-745_en.htm>
27
Kapoor Glass Private Limited v. Schott Glass India Pvt. Limited, Case 22 of 2010 (decided on 29.03.2013),
[2012]111CLA137(CCI), para 9.87,
<http://www.cci.gov.in/May2011/OrderOfCommission/Case22of2010MainOrder.pdf>. However, this decision
of CCI has been reversed by COMPAT in Appeal 253 of 2012 (decided on 02.04.2014), MANU/TA/0005/2014,
<http://www.compat.nic.in/upload/PDFs/aprilordersApp2014/02_04_14.pdf> accessed July 21, 2014
28
Section 4(2)(b) of the Competition Act, 2002
29
Id. Para 9.89.
30
Case 105 of 2013 – M/s Bull Machines Pvt. Ltd. against M/s JCB India Ltd.,
<http://www.cci.gov.in/May2011/OrderOfCommission/261/1052013.pdf> accessed July 21, 2014
31
For a comparative perspective of this doctrine in US and EU and applicability to India see Singh, Applying
“Essential Facility Doctrine” – What’s the Right Approach?, Manupatra Competition Law Reports, (2011), B-
151
32
Competition Act, 1998, South Africa, Section 1(1) (xiv).
33
Arshiya Rail Infrastructure Limited (ARIL) v. Ministry of Railways (MoR) through the Chairman, Railway
Board (KB) and Container Corporation of India Limited (CONCOR), Case Number 64/2010 & 12/2011,
[2013]112CLA297(CCI), Decided On: 14.08.2012, para 17.3,
<http://www.cci.gov.in/May2011/OrderOfCommission/642010.pdf> accessed July 21, 2014
34
<http://www.mca.gov.in/Ministry/pdf/Revised_Draft_National_Competition_Policy_2011_17nov2011.pdf>
accessed August 3, 2014. Also see Vijay Kumar Singh, Applying “Essential Facility Doctrine” – What’s the
Right Approach?, Manupatra Competition Law Reports, (2011), B-151
35
Section 4(2)(d) of the Competition Act, 2002.
36
Case T201/04. Another important case was Case C-333/94 P, Tetra Pak International SA v Commission
[1996] ECR I-5951 (Tetra Pak II - ECJ). Also see Gustafsson, Daniel. Tying under EC Competition Law: The
Tetra Pak II Case
<http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=1335665&fileOId=1646325> accessed
July 21, 2014
37
Kapoor Glass Private Limited v. Schott Glass India Pvt. Limited, Case 22 of 2010 (decided on 29.03.2013),
[2012]111CLA137 (CCI)

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<http://www.cci.gov.in/May2011/OrderOfCommission/Case22of2010MainOrder.pdf> accessed July 21, 2014.
However, this decision of CCI has been reversed by COMPAT in Appeal 253 of 2012 (decided on 02.04.2014),
MANU/TA/0005/2014, <http://www.compat.nic.in/upload/PDFs/aprilordersApp2014/02_04_14.pdf> accessed
July 21, 2014
38
S.M. Dugar, Commentary on MRTP Law Competition Law & Consumer Protection Law, 4 th Ed., LexisNexis:
2009, p. 714-726
39
In Re Anand Gas, RTP Enquiry No. 43/1983 Order dated 07.06.1984
40
Case 2 of 2009, Consumer Online Foundation against Tata Sky,
<http://www.cci.gov.in/menu/MainOrderConsumer250411.pdf> accessed August 6, 2014
41
Section 4(2)(e) of the Competition Act, 2002.
42
Gustafsson, Daniel. Tying under EC Competition Law: The Tetra Pak II Case
<http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=1335665&fileOId=1646325> accessed
July 21, 2014
43
Para 10.91 and 11.6.
44
M/s. HNG Float Glass Ltd. v. M/s. Saint Gobain Glass India Ltd., Case No. 51 of 2011 Decided On:
24.10.2013, [2014]118CLA500(CCI), at para 60,
<http://www.cci.gov.in/May2011/OrderOfCommission/266/512011.pdf> accessed July 21, 2014
45
Para 9.103.
46
[Omitted by Competition (Amendment) Act, 2007] Prior to omission, clause (d) of sub-section (2) of section
28 read as under:- “the payment of compensation to any person who suffered any loss due to dominant position
of such enterprise;”
47
Jai Balaji Industries Ltd. v. Union of India, AIR 2011 Gau 109, para 128 onwards (for a discussion on the
applicability of the Competition Act)

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