Introduction:
The term ‘Dominant Position’ refers to a position of superiority relative to others within a given context, often attributed to various factors. While occupying a dominant position is not inherently problematic, the improper exploitation thereof is deemed objectionable. Such exploitation may manifest in various detrimental outcomes, including the stifling of fair competition among market participants, the exploitation of consumer welfare, and the hindrance of equal market access for others based on meritocratic principles.
In order to curb the potential abuses of dominant market positions, Section 4 was incorporated into the Competition Act of 2002 through Notification No. 1241 (E) on 15.05.2009.
Section 4 of the Competition Act, 2002 provides for prohibition of abuse of dominant position. The Act defines the term “Dominant Position” as a position of strength, enjoyed by an enterprise, in the relevant market in the country which enables the enterprise to:
- Operate independently of competitive forces prevailing in the relevant market, or,
- Affects it competitors or consumers or the relevant market in its favour.
Section 4(1) of the Competition Act stipulates that neither an enterprise nor a group shall engage in the abuse of its dominant position. The prohibition explicitly targets the misuse rather than the mere possession of dominance. This provision prohibits any enterprise or group from engaging in the abuse of a dominant position. Preceding the Competition (Amendment) Act of 2007, Section 4 applied solely to individual enterprises, but subsequent to the 2007 Amendments, it extends its scope to encompass groups of enterprises as well.
Practices that constitute Abuse of Dominant Position:
Section 4(2) of Competition Act 2002 provides for practices which constitute abuse of dominant position. These are:
- Directly or indirectly, imposes unfair or discriminatory-
- Condition in purchase or sale of goods or services; or
- Price in purchase or sale (including predatory price) of goods or service.
- Limits or restricts:
- Production of goods or provision of services or market thereof; or
- Technical or scientific development related to goods or services to prejudice of consumers
- Indulges in practice or practices resulting in denial of market access in any manner
- 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
- Uses its dominant position in one relevant market to enter into, or protect, other relevant market.
Consequences of Abuse of Dominant Position:
Following an inquiry into the abuse of a dominant position, the Competition Commission is empowered under Section 27 of the Competition Act to issue any or all of the following orders:
- Direct an enterprise with dominant position involved in abuse of such dominant position to discontinue such abuse;
- Impose penalty not exceeding 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 abuse;
- Direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission;
- Direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of cost, if any;
- Pass such other order or issue such directions as it may deem fit.
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