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National Webinar at
Center for Corporate and Competition Law at
Symbiosis Law School, Hyderabad
Dhanendra Kumar, IAS (Retd)
Former Chairman, Competition Commission of India
Founder Chairman, Competition Advisory Services (I) LLP
& Former Secretary to Government of India
Former Executive Director, The World Bank
Abuse of Dominance in Competition Law
27th August 2021
Indian Competition Law
 Preamble-
- For- Economic development of the country
- Instrumentality- establishment of a Commission
- To prevent practices having adverse effect on
Competition
- To promote and sustain competition in market
- To protect the interests of consumers
- To ensure freedom of trade carried on by other
participants in markets in India
(each pillar important)
2
© (Competition Advisory Services (I) LLP)
Indian Competition Law…contd.
 Three Pillars-
 Section 3- Anti-competitive agreements
 Section 4- Abuse of dominant position
 Section 5 & 6- Regulations of combinations
 Section 7- Establishment of Commission
 Section 8- Composition of Commission (shall
consist of a Chairperson and not less then two
Members and not more than six)
 Section 18- Duties of Commission – “shall be duty..”
3
© (Competition Advisory Services (I) LLP)
Abuse of Dominant Position
(an overview)
 Framework
 Definition of “dominant position”
 Assessment of dominant position
 Abusive Practices
 Predatory pricing, price and margin squeeze
 Interim order, procedure for investigation
 Penalties, division of dominant enterprises
 Challenges, new tech, e-commerce
 Case Law
4
© (Competition Advisory Services (I) LLP)
Abuse of dominance-conceptually
 Conceptually, to prohibit practices having AAEC in
markets in India.
 Determination of dominance is based on qualitative
assessment of prevalent market dynamics and relative
position of strength enjoyed by the enterprise.
 A three-step analysis required- to determine the
relevant market, assessment of dominant and
assessment of abusive conduct.
 No bright line market share test, to holistically
consider several factors, enumerated subsequently.
5
© (Competition Advisory Services (I) LLP)
Framework
 Section 4 of the Competition Act, 2002 prohibits
abuse of dominant position by an enterprise/group
 Dominance not unlawful; abuse prohibited
(difference from MRTP-size not/conduct frowned)
 Both exclusionary and exploitative behavior
covered
 Conducts not specified (except for predatory
pricing) – broad contours provided
6
© (Competition Advisory Services (I) LLP)
Definition of Dominant Position
Explanation (a) to Section 4 of the Act
 Position of strength enjoyed by an enterprise in
the relevant market which enables it to:
o Operate independently of competitive forces
prevailing in relevant market; or
o Affect its competitors or consumers or the
relevant market in its favor
(also called- unilateral conduct)
7
© (Competition Advisory Services (I) LLP)
Assessment of Dominant position
Two elements:
 Defining “relevant product” and
“relevant geographic markets”
 Analysis of factors listed in Section
19(4) of the Act
8
© (Competition Advisory Services (I) LLP)
Relevant Product Market
 “..all those products or services which are regarded
as interchangeable or substitutable by the
consumer, by reason of characteristics of the
products or services, their prices and intended use”
 Demand substitution
 Customers’ ability and willingness to substitute
away from one product to another in response to
an increase in price or a reduction in quality
9
© (Competition Advisory Services (I) LLP)
Demand Substitution
Hypothetical Monopolist/SSNIP Test
 whether customers for the product/service can switch
readily to a similar product/service in response to a
small but permanent price increase (5% - 10%)
 the higher degree of substitution among commodities/
services, the more fierce competition, and the more
likely such commodities/services belong to the same
relevant market
 a market is defined as a collection of products/
services, the supply of which can be scattered or
monopolized hypothetically
10
© (Competition Advisory Services (I) LLP)
Relevant Geographic Market
“…area in which the conditions of competition for
supply of goods or provision of services or demand of
goods or services are distinctly homogenous and can
be distinguished from the conditions prevailing in the
neighbouring areas”
Contd…
11
© (Competition Advisory Services (I) LLP)
Relevant Geographic Market…contd.
Factors to be considered are:
 regulatory trade barriers
 local specification requirements
 national procurement policies
 adequate distribution facilities
 transport costs
 language
 consumer preferences
 need for secure or regular supplies or rapid after-
sales services
12
© (Competition Advisory Services (I) LLP)
Relevant Geographic Market
 If prices appreciably raised or volume appreciably
curtailed within a given area, can supply from other
sources be expected to enter promptly and in large
enough amounts to restore the old price or volume?
 If sufficient supply would promptly enter from other
geographic areas, then the "defined market" is not
wide enough in geographic terms
 Narrowest market which is wide enough so that
products from adjacent areas or from other
producers in the same area cannot compete with
those included in the market
13
© (Competition Advisory Services (I) LLP)
Relevant Market
Set of products and locations that
exercise a significant competitive
constraint on each other
14
© (Competition Advisory Services (I) LLP)
Factors to determine dominance
(Section 19(4)
 No market share thresholds for
- Dominance presumption
- Safe harbour presumption
 Market share is one of the many factors listed in
Section 19(4) of the Act to assess dominance
15
© (Competition Advisory Services (I) LLP)
 Market share
 Size and resources of the enterprise - size –
financial resources – capacity
 Size and importance of competitors – relative
size is important
 Economic power of the enterprise including
commercial advantage over competitors – control
over source of supply/essential facility, technology lead
16
Factors to determine dominance..contd.
© (Competition Advisory Services (I) LLP)
Factors to determine dominance..contd.
 Vertical Integration of the enterprises or sale or
service network of such enterprises – could impede
access of potential entrant
 Dependence of consumers on the enterprise – habit
– inertia-inelastic demand
 Dominance created by statute or government
authority – sole licensee/concessionaire – public sector
monopoly
 Entry Barrier – structural, regulatory, strategic
 Countervailing buying power – does it offset market
power?
17
© (Competition Advisory Services (I) LLP)
Factors to determine dominance..contd.
 Market Size and Structure
 Social obligation and social costs
 Relative advantage of the dominant firm vis-à-
vis economic development
 Any other factor – discretion of CCI- residual
factors
18
© (Competition Advisory Services (I) LLP)
Abusive Practices of Dominance
• Imposing unfair (including predatory), discriminatory
conditions or prices, in purchase/sale of goods/services
• Limiting or restricting production of goods or provision
of services in the market
• Limiting or restricting technical/scientific development
in goods/services to the prejudice of consumers
• Denial of market access in any manner
• Making conclusion of contracts subject to acceptance of
supplementary obligations, having no connection with
subject of contracts
• Use of dominant position in one relevant market to enter
into or protect other relevant market (leveraging)
19
© (Competition Advisory Services (I) LLP)
Examples of Abusive Practices
 Two categories of abuse can be distinguished:
 Exclusionary - conduct which excludes actual or
potential competitors (horizontal /customer or
vertical/input foreclosure)
 Exploitative – conduct which is unfair or
unreasonable towards person(s) who depend on
the dominant enterprise for supply of
goods/services
20
© (Competition Advisory Services (I) LLP)
21
Examples of Abusive Practices…contd.
Exclusionary Practices Exploitative Practices
Predatory Pricing Excessive /unfair pricing
Price Discrimination Imposition of unfair
condition
Tying and bundling
Margin Squeeze
Refusal to supply
Long term exclusive
dealing
21
© (Competition Advisory Services (I) LLP)
Forms of abuses-Predatory Pricing
 Predatory pricing by dominant entities is the illegal act
of setting prices too low in an attempt to eliminate
competition, finally targeted to achieve monopoly.
 Consumers may benefit from lower prices in the short
term, but suffer later with reduced competition, rise in
prices and decline in choice.
 Allegations may sometimes be difficult to prove,
defendants may argue lowering prices part of normal
competition. Also, at the time of entry in the market,
may not be dominant.
 Regulations exist- CCI (Determination of Cost of Production)
Regulations 2009) of 20th August 2009
22
© (Competition Advisory Services (I) LLP)
Forms of abuses-Price and Market Squeeze
 Although not explicitly defined, it is a form of Exclusionary
Abusive Conduct by a dominant undertaking.
 When an undertaking which is active in vertically related
markets, and dominant in the upstream market sets the
margin between the prices of upstream and downstream
products at a level, which does not allow even an equally
efficient competitor in the downstream market to trade
profitably on a lasting basis.
 The undertaking must be active in upstream and
downstream markets connected to each other in a
production chain, transferring its market over the
upstream product to the downstream market.
23
© (Competition Advisory Services (I) LLP)
Interim Order (Section 33 of the Act)
 Where during an inquiry, CCI finds a contravention of
law (u/s 3, 4 or 6), that it has been committed,
continues to be committed or about to be committed,
the Commission may grant a temporary injunction
restraining any party from carrying such act until
conclusion of such inquiry or until further orders,
without giving notice to the opposite party, where it
deems necessary.
 CCI has invoked these powers in several cases (like in
DLF case, etc.) where it has so felt.
24
© (Competition Advisory Services (I) LLP)
Procedure for investigation by DG, CCI
 On receipt of an information or on suo moto basis,
when CCI is of the opinion that prima facie case, it
shall direct the DG (Sec. 26(1) to conduct an
investigation.
 If CCI is of the opinion that prima facie case, it may
close the matter and pass such orders as it deems fit.
 DG on receipt of a direction u/s 26(1) shall conduct
and submit a report on its findings to CCI within
specified period.
 CCI may forward a copy of the report to the party’s
concerned, and pass appropriate orders after granting
them hearing.
25
© (Competition Advisory Services (I) LLP)
Orders by CCI in Abuse of Dominant Position
(Section 27 of the Act)
 When CCI finds that there has been a contravention
(of Sec. 3 or Sec. 4), it may pass all or one of the
following orders-
 Cease and desist
 Impose such penalty as it deems fit, not more than 10%
of the average of the turnover for the last three
preceding financial years.
 Direct the enterprises to abide by such other orders as
the commission may pass, and comply with the
directions, including payment of costs, if any.
26
© (Competition Advisory Services (I) LLP)
Division of Enterprise enjoying dominant position
(Section 28 of the Act)
 CCI may, notwithstanding anything else, may by order
direct division of an enterprise enjoying dominant
position to ensure that such enterprise does not abuse
its dominant position.
 In particular, and without prejudice, it may include-
 transfer or vesting of property, rights, liabilities etc.
 adjustment of contracts, by discharge or reduction,
 creation, allotment, surrender or cancellation of any
shares, stocks or securities,
 formation or winding up of an enterprise or amendment
of the memorandum of association or articles etc.
27
© (Competition Advisory Services (I) LLP)
Challenges
 Changes in Economic Learning
 Increasing complexity of conducts and markets
 Competition on merits vs. anti-competitive conduct
 Need for reducing risk of over- and under-intervention
 Challenges in assessment of dominance and abuse in a
digital economy
 Avoid chilling
28
© (Competition Advisory Services (I) LLP)
Challenges in a digital economy
 Digital markets are characterized by network
effect, multi-sided nature, high switching costs,
economics of scale and data effects.
 Sale of service on digital platforms for low or zero
cost makes it harder to define relevant markets by
traditional tools.
 In retail/e-commerce, online and offline markets
are different channels within the same relevant
market, due to high substitutability and consumer
preference, more so during pandemic.
29
© (Competition Advisory Services (I) LLP)
Challenges in a digital economy…contd.
 In digital markets, it is sometime difficult to assess
market power of a participant.
 For example, in Case 25-28/2017, the Meru/Uber
case, CCI looked at different factors (including
market shares substitutability, entry barriers) to
determine that Uber is not dominant.
 However, this was appealed in CA No. 641/2017
where SC held that Uber’s exclusionary conduct
implied dominance.
30
© (Competition Advisory Services (I) LLP)
Challenges in a digital economy…contd.
 Effect-based approach and abuse of dominance- Several
players in digital space are large-scale and have global
reach. The focus need to be on evidence based approach
and effects on markets in India.
 Market practices that boost competition- sometimes, the
actual conduct of parties may improve practices that
benefit both consumers and healthy competition,
increasing informed consumer choices, competitiveness
of the market and competitive prices of goods.
 Network effects- need to assess and its overall impact in
digital markets.
31
© (Competition Advisory Services (I) LLP)
A few relevant illustrative cases
 Uber India Systems Private Limited vs CCI (2019)
SC held- losses made by Uber per trip were prima
facie indicative of abuse (predatory pricing)
 MCX vs National Stock Exchange
CCI held NSC abused dominance- leveraged its
dominance in one segment in another, through
predatory pricing
 Belaire Owners’ Association vs DLF
Unfair, one sided agreement drafted by DLF,
discretionary about super area, non-transparency
about data, exploitative against purchasers, etc.
32
© (Competition Advisory Services (I) LLP)
A few other relevant illustrative cases….contd.
 Shamsher Kataria vs Seil Honda, Case No. 03/2011
also known as auto parts case that significant, first case
in India where “after market abuse” was held.
CCI considered after markets, comprising spare parts,
diagnostic tools and provisions of after sale repair and
maintenance, found 14 car companies had abused their
dominant positions, denial of market access to
competitors, applying essential facilities doctrine.
 Kapoor Glass vs Schott Glass
Related to pharmaceutical packaging. CCI found
contravention in discounts/price discrimination.
33
© (Competition Advisory Services (I) LLP)
A few other relevant illustrative cases….contd.
 Kansan News vs Fastway Transmission
Related to transmission of TV signals. Allegation related to
denial market access. CCI found contravention.
 Atos India vs Verifone
Related electronic hardware/software. Issue related to IP
licensing. CCI found contravention.
 Coal India case (2014)
CCI found Coal India, a State monopoly, imposed unfair
terms and conditions in its contracts for supply of coal to
customers. Imposed penalty Rs. 1700 crore on an appeal
and remand back CCI re-examined based on remedial
measures by Coal India, reduced penalty to 1/3rd.
34
© (Competition Advisory Services (I) LLP)
A few other relevant illustrative cases….contd.
 Bulls Machines vs JCB India Ltd (2014)
Bulls Machines complained to CCI alleging abuse of judicial
process by JCB to exclude competitors, CCI found prima facie
case, first case when DG undertook raid/search at JCB, JCB
challenged in High Court obtain stay order.
 Google (2018)
Allegation related to abuse of dominant position and “search
bias”. CCI partly agreed and imposed a fine of Rs. 135.86
crore. Matter is pending in appeal.
 Delhi Vyapaar Mahasangh vs Flipkart and Amazon-
CCI released its study in Indian e-commerce sector, and on a
complaint ordered investigation by DG. Later both Flipkart &
Amazon obtained stay order from Karnataka Court. On CCI’s
appeal, stay has been vacated and investigation commenced.
35
© (Competition Advisory Services (I) LLP)
International Experience
 AoD not treated under per se illegality framework in major
jurisdictions; generally subject to rule of reason
 Debate on ‘Per se – rule of reason’ dichotomy, criticism of rule of
reason outdated
 A continuum of new rules emerging within the broad contours
of rule of reason
 Common core of the varying models - economic content and a
structured framework
 Many jurisdictions have set up “safe harbours”, in effect areas of
per se legality, to reduce uncertainty in enforcement – e.g.
market share screens, price-cost tests or market access screens
36
© (Competition Advisory Services (I) LLP)
Thank you
37
Competition Advisory Services (I) LLP
R-15, Hauz Khas Enclave, New Delhi-110016
Tel: 011-46628866 Cell: 9810600018
Email: info@compad.in Web: www.compad.in
© (Competition Advisory Services (I) LLP)

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Abuse of Dominance in Competition Law

  • 1. 1 National Webinar at Center for Corporate and Competition Law at Symbiosis Law School, Hyderabad Dhanendra Kumar, IAS (Retd) Former Chairman, Competition Commission of India Founder Chairman, Competition Advisory Services (I) LLP & Former Secretary to Government of India Former Executive Director, The World Bank Abuse of Dominance in Competition Law 27th August 2021
  • 2. Indian Competition Law  Preamble- - For- Economic development of the country - Instrumentality- establishment of a Commission - To prevent practices having adverse effect on Competition - To promote and sustain competition in market - To protect the interests of consumers - To ensure freedom of trade carried on by other participants in markets in India (each pillar important) 2 © (Competition Advisory Services (I) LLP)
  • 3. Indian Competition Law…contd.  Three Pillars-  Section 3- Anti-competitive agreements  Section 4- Abuse of dominant position  Section 5 & 6- Regulations of combinations  Section 7- Establishment of Commission  Section 8- Composition of Commission (shall consist of a Chairperson and not less then two Members and not more than six)  Section 18- Duties of Commission – “shall be duty..” 3 © (Competition Advisory Services (I) LLP)
  • 4. Abuse of Dominant Position (an overview)  Framework  Definition of “dominant position”  Assessment of dominant position  Abusive Practices  Predatory pricing, price and margin squeeze  Interim order, procedure for investigation  Penalties, division of dominant enterprises  Challenges, new tech, e-commerce  Case Law 4 © (Competition Advisory Services (I) LLP)
  • 5. Abuse of dominance-conceptually  Conceptually, to prohibit practices having AAEC in markets in India.  Determination of dominance is based on qualitative assessment of prevalent market dynamics and relative position of strength enjoyed by the enterprise.  A three-step analysis required- to determine the relevant market, assessment of dominant and assessment of abusive conduct.  No bright line market share test, to holistically consider several factors, enumerated subsequently. 5 © (Competition Advisory Services (I) LLP)
  • 6. Framework  Section 4 of the Competition Act, 2002 prohibits abuse of dominant position by an enterprise/group  Dominance not unlawful; abuse prohibited (difference from MRTP-size not/conduct frowned)  Both exclusionary and exploitative behavior covered  Conducts not specified (except for predatory pricing) – broad contours provided 6 © (Competition Advisory Services (I) LLP)
  • 7. Definition of Dominant Position Explanation (a) to Section 4 of the Act  Position of strength enjoyed by an enterprise in the relevant market which enables it to: o Operate independently of competitive forces prevailing in relevant market; or o Affect its competitors or consumers or the relevant market in its favor (also called- unilateral conduct) 7 © (Competition Advisory Services (I) LLP)
  • 8. Assessment of Dominant position Two elements:  Defining “relevant product” and “relevant geographic markets”  Analysis of factors listed in Section 19(4) of the Act 8 © (Competition Advisory Services (I) LLP)
  • 9. Relevant Product Market  “..all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use”  Demand substitution  Customers’ ability and willingness to substitute away from one product to another in response to an increase in price or a reduction in quality 9 © (Competition Advisory Services (I) LLP)
  • 10. Demand Substitution Hypothetical Monopolist/SSNIP Test  whether customers for the product/service can switch readily to a similar product/service in response to a small but permanent price increase (5% - 10%)  the higher degree of substitution among commodities/ services, the more fierce competition, and the more likely such commodities/services belong to the same relevant market  a market is defined as a collection of products/ services, the supply of which can be scattered or monopolized hypothetically 10 © (Competition Advisory Services (I) LLP)
  • 11. Relevant Geographic Market “…area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas” Contd… 11 © (Competition Advisory Services (I) LLP)
  • 12. Relevant Geographic Market…contd. Factors to be considered are:  regulatory trade barriers  local specification requirements  national procurement policies  adequate distribution facilities  transport costs  language  consumer preferences  need for secure or regular supplies or rapid after- sales services 12 © (Competition Advisory Services (I) LLP)
  • 13. Relevant Geographic Market  If prices appreciably raised or volume appreciably curtailed within a given area, can supply from other sources be expected to enter promptly and in large enough amounts to restore the old price or volume?  If sufficient supply would promptly enter from other geographic areas, then the "defined market" is not wide enough in geographic terms  Narrowest market which is wide enough so that products from adjacent areas or from other producers in the same area cannot compete with those included in the market 13 © (Competition Advisory Services (I) LLP)
  • 14. Relevant Market Set of products and locations that exercise a significant competitive constraint on each other 14 © (Competition Advisory Services (I) LLP)
  • 15. Factors to determine dominance (Section 19(4)  No market share thresholds for - Dominance presumption - Safe harbour presumption  Market share is one of the many factors listed in Section 19(4) of the Act to assess dominance 15 © (Competition Advisory Services (I) LLP)
  • 16.  Market share  Size and resources of the enterprise - size – financial resources – capacity  Size and importance of competitors – relative size is important  Economic power of the enterprise including commercial advantage over competitors – control over source of supply/essential facility, technology lead 16 Factors to determine dominance..contd. © (Competition Advisory Services (I) LLP)
  • 17. Factors to determine dominance..contd.  Vertical Integration of the enterprises or sale or service network of such enterprises – could impede access of potential entrant  Dependence of consumers on the enterprise – habit – inertia-inelastic demand  Dominance created by statute or government authority – sole licensee/concessionaire – public sector monopoly  Entry Barrier – structural, regulatory, strategic  Countervailing buying power – does it offset market power? 17 © (Competition Advisory Services (I) LLP)
  • 18. Factors to determine dominance..contd.  Market Size and Structure  Social obligation and social costs  Relative advantage of the dominant firm vis-à- vis economic development  Any other factor – discretion of CCI- residual factors 18 © (Competition Advisory Services (I) LLP)
  • 19. Abusive Practices of Dominance • Imposing unfair (including predatory), discriminatory conditions or prices, in purchase/sale of goods/services • Limiting or restricting production of goods or provision of services in the market • Limiting or restricting technical/scientific development in goods/services to the prejudice of consumers • Denial of market access in any manner • Making conclusion of contracts subject to acceptance of supplementary obligations, having no connection with subject of contracts • Use of dominant position in one relevant market to enter into or protect other relevant market (leveraging) 19 © (Competition Advisory Services (I) LLP)
  • 20. Examples of Abusive Practices  Two categories of abuse can be distinguished:  Exclusionary - conduct which excludes actual or potential competitors (horizontal /customer or vertical/input foreclosure)  Exploitative – conduct which is unfair or unreasonable towards person(s) who depend on the dominant enterprise for supply of goods/services 20 © (Competition Advisory Services (I) LLP)
  • 21. 21 Examples of Abusive Practices…contd. Exclusionary Practices Exploitative Practices Predatory Pricing Excessive /unfair pricing Price Discrimination Imposition of unfair condition Tying and bundling Margin Squeeze Refusal to supply Long term exclusive dealing 21 © (Competition Advisory Services (I) LLP)
  • 22. Forms of abuses-Predatory Pricing  Predatory pricing by dominant entities is the illegal act of setting prices too low in an attempt to eliminate competition, finally targeted to achieve monopoly.  Consumers may benefit from lower prices in the short term, but suffer later with reduced competition, rise in prices and decline in choice.  Allegations may sometimes be difficult to prove, defendants may argue lowering prices part of normal competition. Also, at the time of entry in the market, may not be dominant.  Regulations exist- CCI (Determination of Cost of Production) Regulations 2009) of 20th August 2009 22 © (Competition Advisory Services (I) LLP)
  • 23. Forms of abuses-Price and Market Squeeze  Although not explicitly defined, it is a form of Exclusionary Abusive Conduct by a dominant undertaking.  When an undertaking which is active in vertically related markets, and dominant in the upstream market sets the margin between the prices of upstream and downstream products at a level, which does not allow even an equally efficient competitor in the downstream market to trade profitably on a lasting basis.  The undertaking must be active in upstream and downstream markets connected to each other in a production chain, transferring its market over the upstream product to the downstream market. 23 © (Competition Advisory Services (I) LLP)
  • 24. Interim Order (Section 33 of the Act)  Where during an inquiry, CCI finds a contravention of law (u/s 3, 4 or 6), that it has been committed, continues to be committed or about to be committed, the Commission may grant a temporary injunction restraining any party from carrying such act until conclusion of such inquiry or until further orders, without giving notice to the opposite party, where it deems necessary.  CCI has invoked these powers in several cases (like in DLF case, etc.) where it has so felt. 24 © (Competition Advisory Services (I) LLP)
  • 25. Procedure for investigation by DG, CCI  On receipt of an information or on suo moto basis, when CCI is of the opinion that prima facie case, it shall direct the DG (Sec. 26(1) to conduct an investigation.  If CCI is of the opinion that prima facie case, it may close the matter and pass such orders as it deems fit.  DG on receipt of a direction u/s 26(1) shall conduct and submit a report on its findings to CCI within specified period.  CCI may forward a copy of the report to the party’s concerned, and pass appropriate orders after granting them hearing. 25 © (Competition Advisory Services (I) LLP)
  • 26. Orders by CCI in Abuse of Dominant Position (Section 27 of the Act)  When CCI finds that there has been a contravention (of Sec. 3 or Sec. 4), it may pass all or one of the following orders-  Cease and desist  Impose such penalty as it deems fit, not more than 10% of the average of the turnover for the last three preceding financial years.  Direct the enterprises to abide by such other orders as the commission may pass, and comply with the directions, including payment of costs, if any. 26 © (Competition Advisory Services (I) LLP)
  • 27. Division of Enterprise enjoying dominant position (Section 28 of the Act)  CCI may, notwithstanding anything else, may by order direct division of an enterprise enjoying dominant position to ensure that such enterprise does not abuse its dominant position.  In particular, and without prejudice, it may include-  transfer or vesting of property, rights, liabilities etc.  adjustment of contracts, by discharge or reduction,  creation, allotment, surrender or cancellation of any shares, stocks or securities,  formation or winding up of an enterprise or amendment of the memorandum of association or articles etc. 27 © (Competition Advisory Services (I) LLP)
  • 28. Challenges  Changes in Economic Learning  Increasing complexity of conducts and markets  Competition on merits vs. anti-competitive conduct  Need for reducing risk of over- and under-intervention  Challenges in assessment of dominance and abuse in a digital economy  Avoid chilling 28 © (Competition Advisory Services (I) LLP)
  • 29. Challenges in a digital economy  Digital markets are characterized by network effect, multi-sided nature, high switching costs, economics of scale and data effects.  Sale of service on digital platforms for low or zero cost makes it harder to define relevant markets by traditional tools.  In retail/e-commerce, online and offline markets are different channels within the same relevant market, due to high substitutability and consumer preference, more so during pandemic. 29 © (Competition Advisory Services (I) LLP)
  • 30. Challenges in a digital economy…contd.  In digital markets, it is sometime difficult to assess market power of a participant.  For example, in Case 25-28/2017, the Meru/Uber case, CCI looked at different factors (including market shares substitutability, entry barriers) to determine that Uber is not dominant.  However, this was appealed in CA No. 641/2017 where SC held that Uber’s exclusionary conduct implied dominance. 30 © (Competition Advisory Services (I) LLP)
  • 31. Challenges in a digital economy…contd.  Effect-based approach and abuse of dominance- Several players in digital space are large-scale and have global reach. The focus need to be on evidence based approach and effects on markets in India.  Market practices that boost competition- sometimes, the actual conduct of parties may improve practices that benefit both consumers and healthy competition, increasing informed consumer choices, competitiveness of the market and competitive prices of goods.  Network effects- need to assess and its overall impact in digital markets. 31 © (Competition Advisory Services (I) LLP)
  • 32. A few relevant illustrative cases  Uber India Systems Private Limited vs CCI (2019) SC held- losses made by Uber per trip were prima facie indicative of abuse (predatory pricing)  MCX vs National Stock Exchange CCI held NSC abused dominance- leveraged its dominance in one segment in another, through predatory pricing  Belaire Owners’ Association vs DLF Unfair, one sided agreement drafted by DLF, discretionary about super area, non-transparency about data, exploitative against purchasers, etc. 32 © (Competition Advisory Services (I) LLP)
  • 33. A few other relevant illustrative cases….contd.  Shamsher Kataria vs Seil Honda, Case No. 03/2011 also known as auto parts case that significant, first case in India where “after market abuse” was held. CCI considered after markets, comprising spare parts, diagnostic tools and provisions of after sale repair and maintenance, found 14 car companies had abused their dominant positions, denial of market access to competitors, applying essential facilities doctrine.  Kapoor Glass vs Schott Glass Related to pharmaceutical packaging. CCI found contravention in discounts/price discrimination. 33 © (Competition Advisory Services (I) LLP)
  • 34. A few other relevant illustrative cases….contd.  Kansan News vs Fastway Transmission Related to transmission of TV signals. Allegation related to denial market access. CCI found contravention.  Atos India vs Verifone Related electronic hardware/software. Issue related to IP licensing. CCI found contravention.  Coal India case (2014) CCI found Coal India, a State monopoly, imposed unfair terms and conditions in its contracts for supply of coal to customers. Imposed penalty Rs. 1700 crore on an appeal and remand back CCI re-examined based on remedial measures by Coal India, reduced penalty to 1/3rd. 34 © (Competition Advisory Services (I) LLP)
  • 35. A few other relevant illustrative cases….contd.  Bulls Machines vs JCB India Ltd (2014) Bulls Machines complained to CCI alleging abuse of judicial process by JCB to exclude competitors, CCI found prima facie case, first case when DG undertook raid/search at JCB, JCB challenged in High Court obtain stay order.  Google (2018) Allegation related to abuse of dominant position and “search bias”. CCI partly agreed and imposed a fine of Rs. 135.86 crore. Matter is pending in appeal.  Delhi Vyapaar Mahasangh vs Flipkart and Amazon- CCI released its study in Indian e-commerce sector, and on a complaint ordered investigation by DG. Later both Flipkart & Amazon obtained stay order from Karnataka Court. On CCI’s appeal, stay has been vacated and investigation commenced. 35 © (Competition Advisory Services (I) LLP)
  • 36. International Experience  AoD not treated under per se illegality framework in major jurisdictions; generally subject to rule of reason  Debate on ‘Per se – rule of reason’ dichotomy, criticism of rule of reason outdated  A continuum of new rules emerging within the broad contours of rule of reason  Common core of the varying models - economic content and a structured framework  Many jurisdictions have set up “safe harbours”, in effect areas of per se legality, to reduce uncertainty in enforcement – e.g. market share screens, price-cost tests or market access screens 36 © (Competition Advisory Services (I) LLP)
  • 37. Thank you 37 Competition Advisory Services (I) LLP R-15, Hauz Khas Enclave, New Delhi-110016 Tel: 011-46628866 Cell: 9810600018 Email: info@compad.in Web: www.compad.in © (Competition Advisory Services (I) LLP)