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Abuse of Dominant Position


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Abuse of Dominant Position

The Competition Act aims to do away with abuse of dominance. This typically takes place through anti-competitive trade agreements. When an enterprise achieves a strong position in the market, it can run independently of other competitive forces in that market. It also has the power to influence its consumers, competitors and the market to suit its interests.

Based on what is the relevant geographic market or the relevant product market, the CCI or Competition Commission of India can ascertain the relevant market. The following are some of the results which surface when there is an abuse of dominance:

  • Unfair pricing conditions
  • Limited market conditions
  • Blocking entry
  • Using different conditions for similar transactions
  • Predatory pricing

To ascertain which the "dominant position" is, you must find out the following factors:

  • The resources, market share and size of the enterprise
  • Size of competitors
  • The enterprise's economic prowess and advantages that allow it to stay ahead of its business rivals
  • Degree of consumer dependence on that enterprise
  • The enterprise's service network
  • The reason for acquiring a position of dominance-whether due to any statute or because it's a PSU or government company.
  • The barriers which stop entry like financial risks, high capital costs for entry, marketing barriers, regulatory barriers, technical entry barriers, high cost of service for consumers etc.
  • Size and structure of the market
  • Social costs and obligations
  • Comparative advantages with negative effects on competition
  • Other factors deemed as relevant for inquiry by the CCI

What practices are associated with the Dominant Position:

This enactment strictly prohibits any abuse of the "dominant position" which does not need any proof of loss once it is established through any of the following actions:

  • Discrimination in buying or selling of goods
  • When any enterprise is engaged in unfairly imposing unfair means either in buying or selling certain goods and services, or if it imposes unfair prices in the sale or purchase of some goods, it constitutes an abuse. The predatory price refers to the price of selling goods and services which is less than the cost. This price is fixed through rules in an attempt to lessen the prevailing competition or doing away with the competitors.

  • Lessening development and production
  • When any enterprise restricts production of services and goods or stalls the scientific and technical development of certain goods and services thereby going against consumer interests, an abuse of dominance is established.

  • Denying market access
  • When an enterprise stops other competitors from accessing the market through certain practices, an abuse of dominance happens.

  • Supplementary obligations unrelated to contracts
  • When an enterprise forces contracts to be accepted by parties of supplementary obligations that according to their commercial use or nature have no relation with the contract subject, an abuse takes place.

  • Using the "dominant position" to enter other markets
  • When an enterprise uses its dominant position in a relevant market for entering into or protecting another market, an abuse of dominance results.

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