The Competition Commission of India has been repeatedly called upon to adjudicate on disputes
involving allegations of abuse of dominance. Some of these decisions highlight a significant
departure from global trends and to that extent ought to be of interest to corporates.
Abuse of Dominance
Section 4 of the Competition Act deals with abuse of dominance. This section provides that no
enterprise or group shall abuse its dominant position. In considering whether an enterprise or group
is abusing its dominant position, the CCI considers various factors, including:
(a) directly/indirectly imposing unfair or discriminatory condition in the purchase or sale of
goods or services;
(b) limiting or restricting the production of goods or services;
(c) indulging in practices that would lead to denial of market access;
(d) using its dominant position in one relevant market to enter into, or protect another
relevant market.
One of the key provisions in Section 4 is with respect to using its concerns the use of ones dominant
position in one relevant market to enter into, or protect another relevant market. The dominant
the position is defined to mean a position of strength, in the relevant market, (a) which, (a) enables it to
operate independently of competitive forces prevailing in the relevant market, or (b) affect its
competitors or consumers or the relevant market in its favor. 1 The CCI, while inquiring into whether
an enterprise enjoys a dominant position, would consider the factors mentioned in Section 19 (4) of
the Competition Act, some of which including:
(a) market share;
(b) size and resources;
(c) the economic power of the enterprise including commercial advantages over competitors;
(d) dependence of consumers on the enterprise;
(e) size and importance of the competitors;
(f) social obligations and social costs. 2
Assessment of dominance depends on the delineation of the correct relevant market in which
the dominance of the enterprise under consideration is to be assessed. 3
Time and again, the CCI has decided that “mere dominance is not void, rather the abuse of
dominance is required.” In the CCI order in Poonam Gupta v. Unitech Limited, 4 it was observed
1 Section 4 Explanation (a) (e) of the Competition Act
2 Section 19 (4) of the Competition Act
3 GKB Hi-Tech Lenses Private Ltd v Transitions Optical India Private Ltd., Case No. 01/2010, decided on 16 May
2012
4 Poonam Gupta v. Unitech Limited, Case No.04/2012 – https://www.cci.gov.in/sites/default/files/042012_0.pdf
that the Competition Act did not prohibit dominance per se, but rather its abuse. Even in the
Meru Travels case, 5 the CCI observed that dominance was per se not bad, however, abuse of the
the dominant position was against the Competition Act.
Case law
In Poonam Gupta v. Unitech Limited, 6 the informant’s grievance was that Unitech had failed to
fulfill its obligation by not handing over the possession of the purchased apartment, as
promised in time and therefore, violated Section 4 of the Competition Act, by abusing its
dominant position. However, it was held that in this particular case, Unitech had several other
competitors and the informant had a lot of choice at the time of booking of commercial and
residential units; therefore, Unitech’s lack of failure in fulfilling its obligation did not amount to an
abuse of dominance.
The CCI in Matrimony.com Limited and Ors. v. Google and Ors. 7, held that Google enjoyed a
dominant position in the specified product market in India and had abused its dominance. The
CCI ruled that Google enjoys a dominant position in Online General Web Search and Web Search
Advertising Services in India. The prominent placement of Google’s flight unit, displaying flight
offers, directed users to Google’s own specialized flight search options as opposed to third-party
websites depriving users of additional choices and imposing unfair conditions. The CCI was of the opinion that a search engine functioned differently and was distinguishable from a direct search option by typing in the URL which requires users to be aware of the specific websites which offered the relevant information the user is seeking. Also, the CCI observed that Google was dominant in the relevant markets based on its market share, fuelled by the presence of high entry barriers and scale advantage which limited the ability of users to switch to competitors of Google. The majority view held that Google was using its dominance in the market for online general web search to impose restrictive conditions in online syndicate search agreement, in violation of Section 4 (2) (e) of the Competition Act.
In another case, of Transpole Logistics Pvt. Ltd v. Barclays Bank Plc, 8 the informant filed an
information against Barclays Bank Plc, alleging that non-disbursement of credit facility despite
agreeing for the same and collecting processing fees from the informant, led to the opposing
party abusing its dominant position. However, since the market share held by the opposing party
was insignificant, the CCI held that there was no abuse of dominance.
In the Meru Travels case, 9 it was alleged by the informant (i.e.,) Meru, that Ola and Uber had
entered into agreements with drivers and employed a lucrative incentive model, which led to the
5 Meru Travels Solutions Private Limited v. Competition Commission of India and Ors., 2017CompLR43(CompAT)
6 Poonam Gupta v. Unitech Limited, Case No.04/2012 – https://www.cci.gov.in/sites/default/files/042012_0.pdf
7 Matrimony.com Limited and Ors v. Google and Ors., Case No.07/2012 –
https://www.cci.gov.in/sites/default/files/07%20%26%20%2030%20of%202012.pdf
8 Transpose Logistics Pvt. Ltd v. Barclays Bank Plc., Case No. 38/2010 –
https://www.cci.gov.in/sites/default/files/OdrTranspole170910_0.pdf
9 Meru Travels Solutions Private Limited v. Competition Commission of India and Ors., 2017CompLR43(CompAT)
drivers being locked into one network. The informant further alleged that Ola’s incentive of minimum
business guarantee induced drivers to stay on its network and was therefore anti-competitive and
that Ola and Uber were collectively in the “market for radio taxi services in the city of Hyderabad” and
that they had abused their dominant position. In another case, Case No.27 of 2017, and Case No. 28
of 2017 where Meru alleged that Uber and in case No. 28 of 2017, where Meru alleged Ola
respectively to abuse there had abused their dominant position owing to due to the market share they
held, the CCI had held that high market share in itself might not be indicative of dominance. Though
market share is theoretically an important indicator for lack of competitive constraints, it is not a
conclusive indicator of dominance and the CCI rejected the arguments of Meru based on this ground
and held that neither Uber nor Ola abused their dominant position.
In Sonam Sharma V. Apple and Ors. 10 it was alleged by the informant that the opposite party was taking advantage of its dominant position by entering into tie-in agreements with the other opposition parties – which would lock iPhones with a certain carrier. The informant stated that by
offering expensive subscription services and compulsorily locking of the handsets to their
respective networks and by threatening to void the warranty terms of such iPhones that have
been unlocked and/or jailbroken by the users in order to use the same on the networks of their
GSM competitors or to use unapproved third-party applications on their iPhones, constituted an abuse of dominance. However, such lock-ins exist in other countries and can be exited through the payment of a fee. The question before the CCI was whether the opposite parties were guilty of abuse of dominance. In order to check for dominance, the CCI held that the relevant market has to be defined in terms of product-substitutability from a demand perspective and that it has two dimensions – product and geography. In the absence of any specific finding that Apple iPhone’s
constituted a distinct market, the CCI held that the relevant market was the market of
smartphones in India and that the other relevant market was the market for GSM mobile services
in India. The CCI stated that at the time of launch of iPhones in India, Apple did not have its own
retail stores and that it might have been a conscious decision of Apple to sell their iPhones
through existing mobile network operators (MNOs) in a locked state. Further, the customers
were given the option to unlock the phone and that such a practice was present in many other
countries as well. For these reasonsThus, the CCI held that there was no abuse of dominance as
Apple was not dominant, nor was there an anti-competitive agreement executed between the parties.
The CCI’s decisions reflect a tendency to adopt a very commercial approach to competition law,
in general, and abuse of dominance, in particular. This approach is a welcome change from the rather pedantic approach adopted by the CCI, in various other matters.
Do reach out to us if you have any comments or questions.
10 Sonam Sharma V. Apple and Ors., Case No. 24/2011
https://www.cci.gov.in/sites/default/files/242011_0.pdf
