Abuse of Dominance

Dominant position is when one or more company / companies or undertaking(s) in a particular market use their position to eliminate competition and determine economic parameters such as price, supply, production, distribution by acting on their own and independently. A dominant company or undertaking holding such market power has the ability to fix prices above the competition level in order to sell inferior quality products or to reduce its rate of innovation. This term came into picture in the wake of liberalization and recommendations of Raghavan Committee which resulted in the enactment of Competition Act, 2002.

Section 4 (2) of the Competition Act, 2002 states the following practices by a dominant undertaking or enterprise as abusive in nature:

  • Any firm imposing unfair or discriminatory condition in purchase or sale of goods or service directly or Indirectly.
  • Any firm imposing unjust or discriminatory price directly or Indirectly in purchase or sale (including predatory price) of goods or service.
  • Any firm restricting production or provision of service or market.
  • Any firm restricting technical or scientific advancement relating to goods or services.
  • Any firm denying market access in any manner.
  • Any firm making contracts which, by their nature or according to commercial usage, have no rationale with the subject of such contracts.
  • Any firm which uses its dominant position in one market in order to enter or protect other relevant market.

Under section 19 of the act the Competition Commission of India may inquire into any alleged contravention of section 4 of the act. Commission has to consider a detail list of factors while inquiring into any allegations of abuse of dominance  such as share of the enterprise, size and resources of the enterprise, size and importance of the competitors, dependence of consumers, entry barriers, and social obligations and costs in the relevant geographic and product market. After being satisfied that abuse of dominance exists the commission shall direct the Director General to proceed with an investigation. The commission has all the powers conferred under Code of Civil Procedure. The commission can pass such order in order to restrict the abuse. The enterprise can go for an appeal to COMPAT(Competition Appellate Tribunal) if aggrieved within 60 days of the receipt of the order.

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