REGULATION OF ABUSE OF DOMINANT POSITION IN INDIA

Competition is engine of free and fair market economy. It is capable of bringing out best in human beings and also equally capable of bringing out darker side. Competition involves a process through which competitors compete with each other in order to sell their products to customers. They use various strategies to win customers such as introducing discounts, economies of scale which ultimately results in low cost and more profit. But some enterprises in order to gain more customers and profit indulge in bad practices such as cartel, abuse of dominant position etc. which result in breakdown of fair competition.

It also causes distortions in free and fair market conditions of the economy which harm the competitors as well as consumers. Thus there was a need to develop competition law which would regulate the market and help in prohibiting anti competitive practices and abuse of dominance in market.

Abuse of dominant position is causing an inevitable menace to market across the world. India also prohibits abuse of dominant position by enterprise or group of enterprise under section 4 of Competition Act 2002. The previous Act regarding competition law i.e. Monopolies and Restrictive Trade Practices Act, (“MRTP Act”) failed to control in light of emerging complex competition issues completely and hence replaced by present; The Competition Act, 2002 which is more in line with competition laws across the globe and is better suited to the liberalized economy with it focus being on promoting and maintaining competition as well as consumer welfare. The Act primarily aims at regulating three kinds of practices (i) preventing anti-competitive agreements, (ii) prohibiting abuse of dominant position by a market player through unfair or discriminatory prices or conditions and (iii) regulation of combinations and mergers in addition to protecting consumer’s interest, promoting competition and ensuring freedom of trade in Indian markets.

It is one of challenging areas of competition law since enterprises can achieve dominant position legitimately through innovation, superior production or greater entrepreneurial effort but afterwards misuse their position to distort competition and thus harm consumers.

For e.g. Dominant firms might indulge in predatory pricing which drives out other competitors out of the market as they are not able to sell in such low prices competitive environment. If this happens for short period, then it is acceptable; but in longer duration it harms the competition and is referred as abuse of dominant position for which there is prescribed civil penalties under the Act.

With increase in malpractices by competitors this Act also faced several issues and challenges and thus this Act also has turned futile especially in case of control of abuse of dominant position. Thus with  the increase of trend of cases and issues that arise before CCI; several loopholes are identified in Indian legal regime for controlling abuse of dominant position like the Act identifies the dominant position of enterprise to be studied within India and not globally as declared in Coal India case[1]. Thus not acknowledging imports as one competitive constraint in market. Moreover there is no definition of unfair and discriminatory pricing under the Act and most of courts decisions are based on same criteria without giving any definition to unfair and discriminatory pricing. There is also lack of collective dominance as said in case Royal Energy v IOCL[2] and lack of criminal penalties. These loopholes makes Act unsuitable to control abuse of dominant position and thus harmful effect are felt more powerfully even after making a provision for regulating such practices.

Thus there is need to study the several case laws under abuse of dominant position and accordingly identify the loopholes for proper control mechanism under the Act.

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[1]Maharashtra State Power Generation Co. Ltd v Coal India Ltd and Ors

[2] Case.no.1/28(C-97/2009/DGIR);2012 CompLR