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Aditi Jain1
1
aditij09@gnlu.ac.in, 09A006
Soumya Priyadarshinee2
The shepherd drives the wolf for which sheep thanks the shepherd as his liberator while wolf denounces him for same act as destroyer of liberty. In plain words, the sheep and wolf are not agreed upon the definition of Liberty - ABRAHAM LINCOLN
soumyap09@gnlu.ac.in, 09B125
ABSTRACT:The enactment of the Competition Act, 2002 made a very significant departure from the earlier position of law which had a blanket prohibition against the existence of any kind of dominance in the relevant market. However, the present Act is the result of a more evolved analysis from the law makers of the nation. Presently, only instances of dominance which have a tendency to distort effective competition in the relevant market come under the sieve. Thus, the following project first elaborates on the genesis of the section of the 2002 Act that deals with abuse of dominance. But before elaborating on what are the circumstance that lead to dominance the authors have also deliberated on the meaning of dominance as decided in Indian and foreign jurisdictions and the definition of a relevant market. Finally, the discussion goes on to the analysis of various recent cases decided in India that have brought about an increased clarity in the law pertaining to abuse of dominance in India.
1. INTRODUCTION
Dominance means acquisition of significant market power, which enables the enterprise to increase the price or limit production independently of competitors as well as customers. Dominant position has to be determined in the relevant market and the factors for such determination are provided in the Act. Dominance is not treated bad per se; it is the abuse of dominant position which is prohibited. 3 The rationale behind this legal position is that fairness and level playing fields in a market for its players is a prerequisite for its sustainability and development. In a situation of perfect competition the welfare of a consumer becomes paramount and his welfare tops the priorities. But actually this doesnt happen. The invisible hands of Adam Smiths theory in imperfect markets do not always favour consumers interests. Thus, we require a external regime to restrain monopolies, price-fixing, and price discrimination and protect trade and commerce. It is important to note that competition is essential because it creates a situation in which the enterprises strive for the patronage of the consumers of their goods and services. It is required because it forces the enterprises to become more efficient and provide better quality and wider range of products and services at the lowest price. It ensures consumer welfare and induces economic growth. The common mans understanding of perfect competition is possible only in market with numerous buyers and sellers. Additionally, there should be a homogenous product with perfect information for all parties, and
3
Prohibition of Abuse of Dominance, Enforcement Activities, Competition Commission of India, available at: http://www.cci.gov.in/index.php?option=com_content&task=view&id=98, as seen on 16th March 2013.
In United Brands Co. v. Commission6, the ECJ defined dominance as referred in article 82 as a position of economic strength enjoyed by an undertaking which puts it in a position to hinder effective competition in the relevant market by giving behaving independently of its competitors, customers and ultimately of its consumers. The High Level Committee on Competition Policy and Law7 in para 4.4.5 of its report made a very interesting observation. A firm which has a low market share of just 20 per cent with the remaining 80 per cent diffusedly held by a large number of competitors may be in a position to abuse its dominance. At the same time a firm with say 60 per cent market share with the remaining 40 per cent held by another rival competitor may not be in a position to abuse its dominance because of the key rivalry in the market. Thus, a threshold or an arithmetical figure may not adequately define dominance and may either allow real offenders to escape or result in
4 5
The statement of objects clause of the MRTP Act proclaims to this effect. Preamble, The Competition act, 2002, available at: http://www.cci.gov.in/images/media/competition_act/act2002.pdf as seen on 16th March 2013. 6 (Case 27/76) at para 65. 7 Report of High Level Committee on Competition Policy Law SVS Raghavan Committee; available at: http://lp.ncdownloader.com/eb3/?q=Report%20of%20High%20Level%20Committee%20on%20Competition %20Policy%20Law%20SVS%20Raghavan%20Committee29102007%20pdf
Dr. S Chakravarthy, Dominance And Its Abuse, Available at: http://www.circ.in/pdf/CPS-06-AbuseDominance-Ethiopia-Workshop_May08.pdf 9 Official Journal L 336 , 08/12/1997 P. 0016 0047, available at: Official Journal L 336 , 08/12/1997 P. 0016 - 0047
3. CASES IN INDIA 4.1 SURINDER SINGH BARMI v. BOARD FOR CONTROL OF CRICKET IN INDIA (BCCI)
This is one of the most recent cases that has been decided by the Commission in February 2013. The complaint rested on the triple grounds
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Report on the Objectives of Unilateral Conduct Laws, Assessment of Dominance/ Substantial Market Power, and State Created Monopolies prepared by Unilateral Conduct Working Group and presented at the 6th Annual Conference of the ICN at Moscow in May, 2007.
http://taxguru.in/corporate-law/bcci-guilty-abusing-dominant-position-sport-cricket.html
http://www.cci.gov.in/May2011/OrderOfCommission/DLFMainOrder110811.pdf
http://www.cci.gov.in/May2011/OrderOfCommission/MCXMainOrder240611.pdf
http://www.cci.gov.in/May2011/OrderOfCommission/662012.pdf
4. CONCLUSION The difference between dominance and abuse of dominance has been made as the backbone of the applicability of Section 4 of the Competition Act 2000, which makes only the abuse of the dominant position as a punishable act. This is crucial in the light that competition in the fair and healthy manner has to be appreciated and encouraged and only when such a thing becomes detrimental to the society by way of abuse and misuse, does it needs to be kept in check. Section 4(2) further highlights the various scenarios in which abuse is constituted so that corruption by way of ever changing members of the commission and tribunal is also reduced and only in the given cases would an act constitute abuse of dominance. These factors have been crucial in shaping the backbone of the competition law in the country and the coming up of new and more vibrant cases in the field help in eliminating doubts and filling loopholes in the applicability of the same. It has given a platform for the common man to come and challenge an unfair and unjust act that he is forced to undertake due to lack of options in the market, and thus paves the way for a free and better societal existence on a day to day basis.
4. REFERENCES
6.1 Websites
1. http://www.cci.gov.in/May2011/OrderOfCommission/662012.pdf 2. http://www.linkedin.com/groups/Entertainment-CCI-rejects-AjayDevgans-1903800.S.182664710 3. http://taxguru.in/corporate-law/bcci-guilty-abusing-dominantposition-sport-cricket.html 4. http://barandbench.com/brief/2/3266/cci-rules-out-abuse-ofdominant-position-by-nse-amarchand-represents-nse 5. http://www.business-standard.com/article/markets/cci-closes-casealleging-nse-of-abusing-its-dominant-position113030400444_1.html 6. http://www.business-standard.com/article/markets/tribunalreserves-order-on-ftil-plea-in-nse-appeal-case112090700069_1.html 7. http://dsklegal.com/pdf/2011/DSK%20Legal%20Knowledge %20Center%20Update%20-DLF.pdf 8. http://www.firstpost.com/business/dlf-in-no-rush-to-implement-cciorder-on-builder-buyer-pact-578166.html
6.2 Reports
1. Report of High Level Committee on Competition Policy Law SVS Raghavan Committee; available at: http://lp.ncdownloader.com/eb3/?q=Report%20of%20High%20Level %20Committee%20on%20Competition%20Policy%20Law%20SVS %20Raghavan%20Committee29102007%20pdf 2. Official Journal L 336 , 08/12/1997 P. 0016 0047, available at: Official Journal L 336 , 08/12/1997 P. 0016 0047 3. Dr. S Chakravarthy, Dominance And Its Abuse, http://www.circ.in/pdf/CPS-06-Abuse-Dominance-EthiopiaWorkshop_May08.pdf Available at: