Dr.

SHAKUNTALA MISRA NATIONAL REHABILITATION UNIVERSITY

LUCKNOW

FACULTY OF LAW

READING & PRACTICE MANUAL

on

FUNDAMENTALS OF COMPETITION LAW

Students of B.Com., LL.B (Hons.)

BATCH OF 2014-19
Dr. Shakuntala Misra National Rehabilitation University, Lucknow

1
 Faculty of Law

Faculty of Law
Dr. Shakuntala Misra National Rehabilitation University,
Mohaan Road
Lucknow- 226017

Batch of 2014-19, LLB (Hons.), Faculty of Law, DSMNRU

March, 2017

No part of this booklet can be reproduced, stored in a retrieval system or transmitted in any form or by any means,
electronic, mechanical, photocopying, recording and may not be quoted or cited, without prior written permission of
Faculty of Law, DSMNRU.

The authors, contributors are solely responsible for the contents of this booklet. It does not represent the authority of
any sponsor or organization.

For queries contact:

Faculty of Law
Dr. Shakuntala Misra National Rehabilitation University,
Mohaan Road
Lucknow- 226017

2

A bout the Manual
The Indian competition law regime is a nascent regime,
it has been almost 7 years since our new competition
law- the Competition Act has become operational. With
evolution to enactment the Law consists some
objectives of itself toward Economy like to Ensure fair
and healthy competition in the market; Level playing
field; Faster and inclusive growth- Allocative
efficiency, Productive efficiency, and Dynamic
efficiency. To achieve all three of these efficiencies at
the same time are goal of the Competition Law.
There are concerns about the penalties imposed by
the Commission, the effectiveness of the competition-
compliance programs of Indian and multi-national
companies in the country and the lack of general
awareness of competition laws among Indian
companies.
In light of these evolving trends, we have conducted
Group Research paper writing by the Law Students
(Batch 2014-19) to elicit, this manual is divided into
four parts.
Part A deals with Introduction to Competition Law.
Part B deals with Anti-Competitive Agreements with
analysis of the penalties imposed by the Commission,
Circumstantial evidences, prosecution etc. Part C
deals with Assessment of Abuse of Dominance with
types. At last Part D deals with selective case studies.
The idea of this research was to make learning easier
for the students with a twist, ensuring that at the
same time they learn co-operative group skills i.e.
compiling senior year studies with a fun change.
This manual is based on the areas above mentioned
practices of competition law in India. It is our hope and
belief that the present book will bring its own
contribution to the development of an improved
system of competition rules. Each and every chapter
brings new original and constructive ideas which
deserve wider consideration. Everyone here has been
particularly fortunate to have in this regard an
exceptional number of creative students and
academicians who enthusiastically took part in the
initiative and contributed their experiences and ideas
to the present Manual. We wish very much thank each
of them very warmly for their contribution. Further we
wish to thank our Head and Dean (Dr.) Prof. Shephali
Yadav without whom blessing RPMFCL would not exist,
as well as the the Faculty of Law, DSMNRU for its
Common platform to us all on this date. We are
pleased to share the Compilation of our Research
Papers in this Manual.
Last but not least, our gratitude goes to Asst. Prof.
Shail Shakya, Faculty of Law, DSMNRU for his unfailing
support in preparing this RPM, whole idea of changing
way of learning was his initiation, We also
wholeheartedly thank him for assisting us through the
whole process through his high this profile knowledge,
ideas and initiative contributions.
Our hope was to publish a Manual that should have
been as comprehensive as possible in reproducing the
full extent of the particular Research papers for the
Purpose. In the end what came out may seem a little
bulky, but is filled with knowledge everyone who were
involved in this task i.e., professor and students. Few
of Students helped in compiling the Book, moderating
it. Front to back everything is handled by the
contributors only i.e., no professional used or harmed
(thats funny for a Disclaimer).
However, the great majority of them were able to
provide within rather short time limits, a highly
valuable contribution which we are proud to publish
herewith.
1
A
bout Faculty of Law

2
 Part-III: ABUSE OF DOMINANCE

T able of Contents 11. Relevant Product & Geographical Market under

Competition Act, 2002
i. From the Deans Desk 12. Evolution of Competition Law in India- From MRTP
ii. A Note from Faculty of Competition Law Act to Competition Act, 2002
iii. The Writers Speak
iv. Preface 13. Assessment of Dominance in the Relevant Market
v. A Note to the Readers
14. Exclusionary Practices for Abuse of Dominance

15. Exploitative Practices for Abuse of Dominance

Part-I: INTRODUCTION TO COMPETITION LAW
16. Presumptive Abuse of Dominance under
1. Introduction to Environment of Competition in a Competition Act, 2002
Market System
17. Standards of Investigation in Abuse of Dominance
2. Evolution of Competition Law in India- From MRTP under Competition Act, 2002
Act to Competition Act, 2002
Part-IV: SELECT CASE STUDIES
3. Regulation of Competition as a Challenge- Studies
18. Study of CCI Order in Cement Manufacturers
on JNPT Case
Association Case
4. Basic Econometrics & Implementation in
19. Study of CCI Order in DLF Dispute
Competition Law
20. Study of CCI Order in DLF Dispute
5. Economic Evidences in Competition Law- Usage &
Limitations 21. Study of CCI Order in Google Incs Abuse of
Dominance
Part-II: ANTI-COMPETITIVE AGREEMENTS
22. Study of CCI Order in All India Tyres Dealers
6. Circumstantial Evidences for Prosecution of Anti-
Federation
competitive Agreements
23. Study of CCI Order in Abuse of Dominant Position
7. Investigations & Evidences in Vertical & Horizontal
by BCCI
Cartels
Part V: Bibliography & References
8. Adverse Effect & Appreciable Adverse Effects on
Competition- A Study 24. Index of Cases

9. Exceptions in Anti-Competitive Agreements 25. Select Bibliography

10. International Cartels & Adverse Effect on

Competition in India

3
 CONTENTS

1. Introduction to Environment of Competition in a

Market System

2. Evolution of Competition Law in India- From MRTP

Part I Act to Competition Act, 2002

3. Regulation of Competition as a Challenge- Studies

Introduction to Competition Law on JNPT Case

4. Basic Econometrics & Implementation in

Competition Law

5. Economic Evidences in Competition Law- Usage &

Limitations

4
 Chapter 1
Introduction to Environment of Competition in
Market Systems
(Mr. Abhishek Dubey & Mr. Abhishek S Chauhan)1
Definition
Competition is a situation in market, in which sellers
independently strive for buyer's patronage to achieve
business objectives. Competition and liberalization,
together unleash the entrepreneurial forces in the
economy. Competition offers wide array of choice to
consumers at reasonable prices, stimulates innovation
and productivity, and leads to optimum allocation of
resources.
Competition environment in a market is the dynamic
external system in which a business competes and
functions. The more sellers of a similar product or
service, the more competitive the environment in
which you compete. Look at fast food restaurants
there are so many to choose from the competition is
high however, if you look at airlines servicing any
destination, very few actually fly to them. 2 The
environment of competition in a market system is as
follows:
1. Impact of supply and demand
2. competition policy
3. market system
4. market economy
5. market socialism
Impact of Supply and Demand
Increased supply and decreased demand: This
scenario causes a price decrease. Imagine a
concession stand at a football game. The workers
made a lot of popcorn to keep up with the demand
1
Students of B.Com., LL.B. (Hons) 6 th Semester
2 3
COMPETITION COMMISSION OF INDIA [PDF]
during halftime. At this time they could sell the
popcorn for full price, a dollar a bag. As the game is
ending, the workers realize they still have popcorn,
people are leaving and it's better to decrease the
price than throw it away. So they decrease the price
to 50 cents a bag. As time goes on, the workers may
have to decrease the price even more to break even
rather than lose money on the product.
Decreased supply and increased demand: This
scenario causes a price increase. Consider a new
product launch. When a new gadget like a Smartphone
or tablet comes out on the market, it typically starts
out at a high price, right? There are few of them in the
beginning and the company wants to test the waters.
By promoting the features and creating hype about the
product the company is able to charge this price. It
makes customers feel like they have to rush out and
get the product since there are few available. It's
the scarcity effect.3
Competition environment in a market system
The main aim of competition environment in a market
system are to promote competition make market work
better and contribute towards improve efficiency in
individual market and enhanced competiveness of U.K
business within the European union (EU) single market
Aim of Competition environment in a market system to
ensure Effective price competition between the
suppliers.
Market system
A market system is any systematic process enabling
many market players to bid and ask: helping bidders
and sellers interact and make deals.
Because a market system relies on the assumption
that players are constantly involved and unequally
enabled, a market system is distinguished specifically
from a voting system where candidates seek the
support of voters on a less regular basis. However,
www.info.com
2
the interactions between market and voting systems
are an important aspect of political economy, and
some argue they are hard to differentiate, e.g.
systems like cumulative voting and runoff voting involve
a degree of market-like bargaining and trade-off,
rather than simple statements of choice.4

Market economy

The major defining characteristic of a market

economy is that investment decisions, or the
allocation of producer good, are primarily made
through capital and financial markets. This is
contrasted with a planned economy, where investment
and production decisions are embodied in an
integrated plan of production established by a state or
other organizational body that controls the factors of
production.

Market socialism

Market socialism refers to various types of economic

systems where the means of production and the
dominant economic institutions are either publicly
owned or cooperatively owned but operated according
to the rules of supply and demand. This type of market
economy has its roots in classical economics and in
the works of Adam Smith, the Ricardian socialists,
and Mutualist philosophers.

The distinguishing feature between non-market

socialism and market socialism is the existence of a
market for factors of production and the criteria of
profitability for enterprises. Profits derived from
publicly owned enterprises can variously be used to
reinvest in further production, to directly finance
government and social services, or be distributed to
the public at large through a social dividend or basic
income system.5

4
MONDAQ.COM
5
www.tutor2u.net

3
 Chapter 2
Evolution of Competition Law in India- From
MRTP Act to Competition Act, 2002
(Mr. Adarsh Verma, Abhishek Verma & Mr. Naved Islam)6
Post Independence Era
India after independence chose a centrally planned
economic model. This Model was a mixed economy.
Under the mixed economy model, both the private and
public sector co-existed. The approach behind the
mixed economy model was to ensure that the
Government played a significant role in capital
formation in the country in order to promote an
inclusive economic growth and social justice. To
promote economic objective, the Government
reserved for itself strategic industries such as mining,
electricity and heavy industries, serving public
interest. 7 The functions of the private sectors were
made subject to Industrial (Department and
Regulation) Act of 1951(IDRA). The IDRA empowered the
Government to regulate almost every aspect of the
functioning of private sector viz. size of plant and
production size, price of goods produced and its
distribution, foreign trade and exchange control, labor
issues etc.8
The government actively intervened in the entire
mechanism of industrialization. It laid an effective
platform for the public sector to reach the summits of
success by assigning core industrial sectors such as
steal and coal to public sector. On the other hand, the
private sectors had restricted licensing ability. Since
the government was the sole controller of all the
6
Students of B.Com., LL.B. (Hons) 6 th Semester
7
Available at: http://eaindustry.nic.in/handbk/chap001.pdf (
Visited on February 17, 2017)
8
Available at:
https://sol.du.ac.in/mod/book/view.php?id=1267&chapterid=94
5 ( Visited on February 17, 2017)
activities taking place on the commercial front, there
were high tariffs and needless to say, no freedom to
compete fairly. The government supported the
successful and influential entrepreneurs by granting
commercial licenses, as they largely contributed to
the economy and secured collaborations world over.
However, this scenario also led to anti-competitive
behavior amongst a group of businessmen and this
was harming the interests of the public at large. This
led to formation of the MRTP Act, 1969 to prevent
monopolistic and restrictive trade practices which
cause jeopardy to the consumer as well as the service
provider.
Shaping of the MRTP Act
There are following three studies which influenced for
the enactment of the MRTP Act:
1. Hazari Committee Report on Industrial Licensing
Procedure: This study stated that the States have been
biased in granting Industrial Licenses only to wealthy
and influential entrepreneurs and it has resulted in an
uneven growth of the industries.
2. Mahalonobis Committee Report on Distribution and
Levels of Income: This study reported that the
economic model was planned in a way that it
supported the successful industrialists and that the
top ten percent of the population of India hold as much
as 40 percent of the income.
3. Monopolies Inquiry Commission Report: This study
stated that there was concentration of economic
power in the hands of some big business houses. It
also stated that a few industrial houses were
controlling a large number of companies and there
existed in the country large scale restrictive and
monopolistic trade practices. The MIC also drafted a
Bill to curb such practices which later became the
Monopolies and Restrictive Trade Practices Act, 1969.9
9
Available at:
http://reports.mca.gov.in/Reports/44Report%20of%20the%20
4
The MRTP Act aimed at preventing economic power
concentration in a few hands and curbing monopolistic
behavior; prohibition of monopolistic, unfair or
restrictive traded practices. The intention behind this
was both to protect consumers as well as to avoid
concentration of wealth.
The Monopolistic Trade Practice (MTP) is a result of:
unreasonable pricing
limiting or restricting competition or no free
market
limiting development (technical and
economic development by limiting
production and supply)
making unreasonable profits
The Restrictive Trade Practice (RTP) is a result of:
Refusal to deal with the consumers
Selective dealings
Discrimination in pricing scheme
Restriction of area
Tying up the sales
The Unfair Trade Practice (UTP was incorporated in
the statute after the Act was amended in 1984. It is a
result of:
Hoarding or destruction of goods
Promoting false and misleading promotional
contests
Bargain sale
Misleading Advertisement and False
Representation
Free Riding over someone elses reputation
Amendment of 1991 To The MRTP Act
It was in 1991 that India took the initiative in favour of
economic reforms consisting essentially of
liberalization and deregulation known as LPG regime,
an acronym for liberalization, privatization and
monopolies%20inquiry%20commission%201965,%20Vo1.-I-II.pdf
(Visisted on February 18, 2017)
globalization. Subsequently, number of changes were
introduced in policies relating to industrial licensing,
foreign investment, government monopolies and
ownership, etc. Major amendments were effected to
the MRTP Act in 1991. Two of five objectives mentioned
earlier, namely: prevention of concentration of
economic power to the common detriment; and
control of monopolies have been de-emphasized.
Provisions relating to concentration of economic
power and pre-entry restrictions with regard to prior
approval of the Central Government for establishing a
new undertaking, expanding an existing undertaking,
amalgamations, mergers and takeovers of
undertakings were all deleted from the statute
through the amendments.
Limitations of MRTP Act
As noted earlier, a substantial part of the MRTP Act
was focused around monopolistic behavior and
economic concentration. In light of the changing
economic situation and amendment of 1991, there are
marked changes in the international and domestic
trade. A stronger and an adequate law was needed to
cope up with the progressive changes on the economic
and trade front and this gave birth to Competition Act
2002, which attempts to promote free and fair
competition in India.
There were several rulings of the Supreme Court as
well as the MRTP Commission which expressed the
need for stronger provisions. Different cases that
came under the MRTP Act revealed the inadequacy of
the legislation with regard to practices like bid rigging,
cartels, collusion and price fixing, predatory pricing
and abuse of the dominant position.10
One of the biggest failings of the MRTP Act was the
inadequacy of MRTP Act to provide adequate remedy
to complainants. Except for orders directing a
respondent to cease and desist from the alleged
10
Available at
http://shodhganga.inflibnet.ac.in/bitstream/10603/74926/6/ch
apter%203.pdf ( Visited on February 18, 2017)
5
monopolistic, restrictive or unfair trade practices the and it became the Competition Act, 2002. It received
MRTP Commission could not impose penalties for the assent of President of India on January 13, 2003
breach of law and; no other penalty or fine could be and was published in the Gazette of India on January
imposed11. Secondly, the Supreme Court held that the 14, 2003. The Competition Act was partially enforced
wording of MRTP Act did not provide for extra on 20 May, 2009 when the provisions relating to
territorial jurisdiction12 . anticompetitive agreements and abuse of dominant
position were notified. In May 2011, the combination
The Raghavan Committee was constituted to
regulations were also notified and became operative
recommend a suitable legislative framework relating
from 1 June, 2011.
to competition law for the country13. It was felt that
although the MRTP Act seemingly had provisions The Competition Act, 2002 in its preamble states the
regulating anti-competitive practices, in comparison following objectives:
with competition laws of many countries it was
Prevent practices having adverse effect on
inadequate for promoting competition in the market
competition
trade and for reducing, if not eliminating, anti-
competitive practices in the countrys domestic and Promote and sustain competition in the
international trade. markets
Protect the interests of consumers
Competition Act, 2002 Ensure freedom of trade carried on by other
participants in markets, in India
As mentioned earlier, with the shortcomings faced by
the Commission during the administration of MRTP Act The Competition Act 2002 covered four major aspects
and to cope with the economic reforms of 1991, it of competition. The four aspects are Anti-competitive
became crucial for India to adopt a competition policy agreements (Section 3), Abuse of dominance (Section
system wherein the objective is shifted from 4), Regulation of Combinations (section 5 and 6) and
preventing monopoly to one that promotes free Competition advocacy (Section 49).
competition amongst the market players. From a
broader perspective, the changes could also be viewed
as an attempt from the side of Indian legislature to
modify the Indian Competition laws to be in tune with
that of the other leading jurisdictions of the world. As
mentioned earlier, it was also extremely important to
remove prevailing trade barriers and restrictions
hindering competition in India in the liberalized era.
The result was a new bill in the Parliament. The
Competition Bill was passed by the Parliament in 2001

11
Available at:
http://www.competitioncommissionindia.nic.in/speeches_article
s_presentations/speech_ciibangalore29oct.htm ( Visited on
February 18, 2017)
12
Haridas Exports v. All India Float Glass Manufacturer
Association (AIFGMA), (2002) 6 SCC 600
13
Available at:
http://planningcommission.nic.in/aboutus/committee/wrkgrp11/
wg11_cpolicy.pdf ( Visited on February 18, 2017)

6
 Chapter 3
Regulation of Competition as a Challenge-
Lessons from JNPT Case
(Mr. Monu & Mr. Aditya Singh)14
Act/ Sections referred: The Competition Act, 2002
i. Section 2(r)
ii. Section 2(t)
iii. Section 2(s)
Facts of the case
The case of is an essence of a sector specific
authoritys unclear comprehension of a competition
issue. JNPT deals with the Jawaharlal Nehru port in
Mumbai, India that had two terminals container
terminal and bulk terminal. P&O Australia Pty Limited
was disqualified at the bid stage for conversion of bulk
terminal to container terminal.
The Board of Trustees was anxious about P&O
Australia Pty Limited because it already had been
operating a container terminal at Jawaharlal Nehru
Port since 1995. The Board was keen to avoid
concentration of control with one private party and to
increase competition and efficiency and to prevent
monopoly in public interest.
Notwithstanding the concerns of the Board of Trustees
on prevention of monopoly, interestingly, P&O
Australia Pty Limited was permitted to bid for another
port based in Mumbai, the Mumbai port but disqualified
from bidding for the second terminal at Jawaharlal
Nehru Port. Further, there is an independent authority,
the Tariff Authority for Major Ports that determines
the ceiling for the tariffs by the private players
services
14
Students of B.Com., LL.B. (Hons) 6th Semester
One of the foremost concerns playing on the minds of
the Board of Trustees was that P&O already controls
Chennai Container Terminal and one of the Jawaharlal
Nehru Port terminals and adding the second terminal
at Jawaharlal Nehru Port would lead P&O to control in
excess of 30% of the total container traffic to and
from India. Bombay High Court agreed with the anxiety
expressed by the Board and failed to appreciate the
boundaries of the market that it ought to be
concerned about.
Issues for determination in the case
The Competition Act, 2002, relevant market is an
amalgamation of relevant product market and
relevant geographic market 15 . Further, relevant
product market is dependent upon all
interchangeable/substitutable goods and services.16 In
addition, relevant geographic market is dependent
upon homogeneity of conditions of competition and
whether the conditions are distinguishable from the
neighbouring areas.17 An application of SSNIP test as
reflected in the legislative provisions indicates that
the relevant market isnt entire India as a ship
entering port situated in Mumbai doesnt have a
realistic chance of entering through, for instance,
Chennai.
The problem with JNPT is not the outcome but the
process of the judgment. Neither the Board of
Trustees nor the Bombay High Court appears to have
15
Section 2(r) of the Competition Act, 2002 states: relevant
market means the market which may be determined by the
Commission with reference to the relevant product market or the
relevant geographic market or with reference to both the
markets.
16
Section 2(t) of the Competition Act, 2002 states: relevant
product market means a market comprising all those products
or services which are regarded as interchangeable or
substitutable by the consumer, by the reason of characteristics
of the products or services, their prices and intended use.
17
Section 2(s) of the Competition Act, 2002 states: relevant
geographic market means a market comprising the area in
which the conditions of competition for supply of goods or
provision of services or demand of goods or services are
distinctly homogeneous and can be distinguished from the
conditions prevailing in the neighbouring areas.
7
appreciated the nuances of competition law and policy.
JNPT does not even explore an alternative possibility
a standard clause in the bid stating that if parties are
found contravening conditions of competition, then the
contract could be revoked. Indeed, JNPT could have
explored a stricter version of such a clause it could
have suggested that in case P&O Australia Pty Ltd. is
found adversely affecting conditions of competition,
then its licenses across India would stand revoked.18
Indeed, an application of SSNIP test indicates that
Jawaharlal Nehru Port and Mumbai Port are
interchangeable/ substitutable. Therefore, if the
government was truly worried about an emerging
monopoly, it should not have permitted P&O Australia
to bid for Mumbai Port while it was still operating
container terminal at Jawaharlal Nehru Port. This is
an interesting question that JNPT leaves unanswered.
At Jawaharlal Nehru Port, considerations of efficiency
are significant. If the same company manages two
terminals at the same port, one may see efficiency
gains. However, control of a substitute port would
definitely have impact upon conditions of competition.
1. Whether there is overlapping of jurisdiction in
the JNPT case under the provisions of the
Competition Act, 2002?
There are innumerable instances of apparently
overlapping jurisdictions on questions of competition.
Drafters of legislation havent been very careful while
allocating specific areas of work for economic
regulators. The muddled understanding of framers of
the legislation is evident both in recent legislations as
well as past ones. Besides inelegance, sometimes
legislations reflect lack of comprehension of
regulatory jurisprudence.
18
Given Indias stature as major emerging economy, such a
clause would have definitely acted as a great deterrent for P&O
Australia.
2. Whether the consumer welfare is the primary
concern of Regulation/ Competition?
The initiation of Indian economic reforms since past
one and half decade has meant gradual withdrawal of
the extent of governmental control over economic
decision making. Absence of governmental rules
controlling business conduct does not necessarily
indicate a void in the field of consumer welfare. The
social contract of governmental withdrawal has an
underlying concordat of promotion and protection of
consumer welfare through alternative, direct and
less-intrusive mechanisms.
Co-existence of competition authority and sectoral
regulator Institution-building is a complex, time-
consuming exercise. At a pragmatic level, sector
specific regulators are here to stay as it would be
practically impossible to abolish the authorities that
have already come into existence.
Further, experiences of other countries arent of much
assistance. There is a wide diversity in models that
are available. While Australia on one hand, privileges
competition authority, the UK grants explicit
concurrent powers to sectoral regulators. Empirically,
there is no final, definitive conclusion available. Indeed,
as the UK experience shows, despite concurrent
competition powers exercised by sectoral regulators,
there hasnt been any infringement decision till
September 2005.
The optimal, sui generis model must be rooted in
contextual legal milieu. To be sure, both sector
specific regulator and competition authority have
unique core competencies to offer. Nevertheless,
there are pragmatic, descriptive as well as normative
justifications why Indian competition authority ought
to trump sector regulators. Descriptively, the
compelling justification behind primacy of competition
authority is that unlike legislations governing sector
specific regulators, competition legislation grants
private right of action along with provision of
damages. The twin rubrics of private enforcement and
8
damages ensure a qualitatively higher standard of Notes
consumer welfare which is unavailable under the
legislative framework of any sector specific regulator.

Conclusion

The Indian sector specific regulators involve

exploratory as well as normative insights. Unlike
sector regulators, competition authority combines the
twin powers of private enforcement with right to claim
damages. In the absence of the two, sector specific
regulators cannot possibly serve as an effective
instrument for promotion and protection of consumer
welfare.

Normatively, competition enforcement is a

sophisticated, complex endeavour. Therefore, in order
to reduce transaction cost and efficiently enhance
legal certainty, the realm of competition law
enforcement ought to be left in the hands of the
competition authority.

This does not necessarily, as a corollary lead to

conclusion that the sector specific regulators must
wind up their shops. The paper proposes
establishment of a common, across-the-sector
regulatory appellate tribunal in order to develop a
strong, predictable regulatory jurisprudence that
would be in the best interest of both the consumers
and business enterprises.

9
 Chapter 4
Basic Econometrics & Implementation of
Competition Law in India
(Mr. Vijay P Yadav & Ms. Ayushi Yadav)19
What is economics?
Alfred Marshall also stressed the importance of
wealth. But he also emphasized the role of the
individual in the creation and the use of wealth. He
wrote: Economics is a study of man in the ordinary
business of life. It enquires how he gets his income
and how he uses it. Thus, it is on the one side, the
study of wealth and on the other and more important
side, a part of the study of man. Marshall, therefore,
stressed the supreme importance of man in the
economic system. Marshalls definition is considered
to be material-welfare centered definition of
Economics.20
Why is economics important in competition law?
They are important to the preservation of economic
freedom and the free enterprise system. The need for
competition law arises because market can suffer
from failures and distortions, and various players can
resort to anti-competitive activities such as cartels,
abuse of dominance etc. which adversely impact
economy efficiency and consumer welfare.
Introduction to economic issues in competition
policy
It includes Reforms in certain Policy areas to make
these more pro-competition21 :-
19
Students of B.Com., LL.B. (Hons) 6 th Semester
20
http://www.newagepublishers.com
21
http://www.competitioncommission.gov.in
INDUSTRIAL POLICY
Industrial Policy Industrial Policy has to address and
reform licensing requirements, restrictions on
capacities, or on foreign technology tie ups, guidelines
on reservations for small location of industries, scale
industry, etc. These adversely affect free competition
in the market.
TRADE POLICY
Trade policy has important implications for
development of competition in the markets. Measures
for liberalization of trade promote greater competition
e.g. reducing tariffs, removal of: quotas/physical
controls, investment controls, conditions relating to
local content etc.
PRIVATIZATION/DISINVESTMENT
Empirical research has found that state- owned
enterprises than private owned firms, for generally
tend to be less efficient, low incentives, lack of
reasons such as manager compensation direct
accountability, hard budget constraints for managers,
etc.
State owned enterprises are generally insulated from
market forces and receive protection/benefits such
as government imposed barriers to entry, price
regulation and subsidies. Thus privatization of state
owned of enterprises is important element
competition policy. However, in privatization/
disinvestment process, care is to be taken that state
monopoly is not replaced by private monopoly.
ECONOMIC REGULATION:
New legislation and regulations to promote
competition and to bring about restructuring of major
industrial sectors is essential. Legislation to aim at
separating natural monopoly elements from potentially
competitive activities, and the regulatory functions
from commercial functions, and also create several
competing entities through restructuring of essential
10
competition activities and to create a competitive
environment in following sectors.
Market Power
Economists tend to equate the competitive price with
marginal cost and employ the Lerner Index that
relates the percentage mark-up on marginal cost to
the elasticity of the residual demand function, as a
measure of market power. Note, however, that this
technical notion of market power defined as pricing
above marginal cost may be distinct from the notion of
market power as a competition law concept. Perfect
competition is a theoretical concept that relies on
several restrictive assumptions to be satisfied.
Therefore, competition economists have suggested the
concept of effective competition which is compatible
with prices exceeding marginal cost. under perfect
competition are equated with marginal costs and may
therefore also be considered competitive prices, the
notion of competitive prices in competition law is often
less precise and prices in the absence of competition
law infringements may be called competitive prices
even if they exceed marginal cost and the market
cannot be characterized as perfectly competitive22 .
Concepts & Definitions
Market Definition is one of the most important
analytical tools to examine and evaluate the
competitive constraints that a firm faces and the
impact of its behavior on competition.
However, market definition is a complex task and
there is broad agreement that in some cases its
appropriateness can be called into question. The main
concerns relate to the limited value of even accurately
calculated market shares and concentration measures
in specific kinds of markets.
In reaction to these specific drawbacks of market
definition, new instruments have been developed.
Pricing pressure indices and other tools have been
22
http://www.oecd.org
suggested for an initial assessment of mergers. For
monopolization or abuse of dominance cases, evidence
relating to the direct effects of anticompetitive
practices or other conclusive evidence of abuse has
also been proposed.
Sources of market power
Market power in economics is the ability of a firm or
firms to influence the price of goods by controlling
supply or demand. In theory, there is no market power
because all firms are in perfect competition, which
means that there are many nearly identical firms
producing nearly identical goods; if one firm raises
prices, buyers will simply choose a similar product at
a cheaper price. However firms are not always in
perfect competition, and some firms -- those that are
monopolies or oligopolies -- do enjoy market power.23
Barriers to Entry
Barriers to entry are the existence of high startup
costs or other obstacles that prevent new competitors
from easily entering an industry or area of business.
Barriers to entry benefit existing firms already
operating in an industry because they protect an
established company's revenues and profits from
being whittled away by new competitors. Common
barriers to entry include special tax benefits to
existing firms, Patents, strong brand or
customer loyalty, and high customer switching costs.24
Market Definition
In the ordinary language, market refers to a place
where goods are bought and sold. Thus Koyambedu
market in Chennai refers to a place where vegetables
are sold. In economics, market does not refer to any
particular place in which goods are bought and sold.
But it refers to buying and selling of a commodity. In a
market a commodity is bought and sold under given
conditions and there will be a number of buyers and
23
http://www.ehow.com
24
http://www.investopedia.com
11
sellers who will be in close touch with each other. For
example, a fish market refers to buying and selling of
fish; here both buyers and sellers are in close contact.
According to Benham, Market is any area over which
the buyers and sellers are in close touch with one
another either directly or through dealers, that prices
obtainable in one part of market affect the prices paid
in other parts.25
Role of Market Definition in Competition Law
Markets do not always work efficiently, harming
consumers and society. When this happens,
competition authorities may seek to better understand
the dynamics of competition in a given market or
sector, in order to identify the reasons for poor
performance and recommend policy options for
dealing with them.
Market studies usually involve an in-depth assessment
of market structures or competitive conditions in a
given sector; and aim to detect inefficiencies arising
from weak competition, even if they do not identify
behavior violating competition laws. There are
conceptual and procedural differences regarding
market studies among competition authorities.
This hearing discussed the results of the OECD survey
on market studies and how this can be categorized
according to their main purpose (competition
advocacy/pre-enforcement) with an overview of the
triggers for each type of study. It also looked at
variations in procedural and analytical methodologies
to help identify practices that competition authorities
can consider when undertaking market studies.
Experts interacted with delegations in order to collect
material that will be used to produce a manual on
capacity building for market studies.26
25
http://www.textbooksonline.tn.nic.in
26
http://www.oecd.org
Price Discrimination, Discounts, Tying & Bundling
This associates the growth of the urban economy with
its ability not just to meet its own needs, but to
produce goods and services it can sell outside the
city. The goods and services used to meet the needs
of the city are the so-called "basic" goods, the goods
and services which are exported to other communities
are the so-called "non-basic" goods. Economic base
theory asks about those aspects of the city's economy
which bring in revenue from other places from the
sale of non-basic goods and services.27
4 When are these practices anti-competitive?
In the study of economics and market competition,
collusion takes place within an industry when rival
companies cooperate for their mutual benefit.
Collusion most often takes place within the market
form of oligopoly, where the decision of a few firms to
collude can significantly impact the market as a whole.
Cartels are a special case of explicit collusion.
Collusion which is not overt, on the other hand, is
known as tacit collusion.28
Market failure analysis: justifying state aid:-
Several state aids create unequal operating conditions
for businesses.
Examples:-
Subsidies
Tax rebates
Preferential loans
Capital injection
Public procurement
Experience suggests that such policy measures rarely
have incentives for firms to become successful
results and destroy in efficient.
27
http://www.yorku.ca
28
http://www.cuts-ccier.org
12
 Chapter 5
Economic Evidences in Competition Law:
Usage & Limitations
(Ms. Prawartika Singh & Ms. Nainshi Srivastava)29
Introduction
Economic analysis plays a central role in competition
enforcement .Economic as a discipline provide a frame
work to think about the way in which each particular
market operates and law competitive interactions take
place. This framework further allows formulating the
possible consequences of the practices under review.
Whether a merger, an agreements between firms, on
single firm conduct in certain cases .It may also
provide tools to identify the direction and magnitude of
case effects empirically if appropriate and relevant. In
number of cases, economic analysis may involve the
production, handling and assessment of leguminous
sets of quantitative data, including when appropriate,
the development of econometric models.
It is necessary to (i) ensure that economic analysis
meet certain minimum technical standard at the
outset (ii) facilitate the effective gathering and
exchange of facts and evidence, in particular any
underlying quantitative data, and (iii) use in an
effective way reliable and relevant evidence obtained
during the administrative procedure whether
quantitative or qualitative. If economics is central to
competition assessment, the institutions that make
this assessment must be able to handle the evidence
that is involved.
Economic evidence is more significant in most
competition and stop there. Leaving it to approach it in
the following ways:
29
Students of B.Com., LL.B. (Hons) 6 th Semester
Firstly, it is necessary to look at the history and
context there is almost smug consensus that
competition assessment now is firmly based on sound
economics. It certainly was not always company, could
supposed to company ceased so.
Secondly, it is to be examined that what is the
important on economics for competition relation to
policy, analytical framework the treatment of
evidence.
After that we need to look at how it all work in
practice, to look at how different bodies, but
particularly the competition commission, look at
economic evidence and to considered in a case
environment, particularly as the techniques become
more sophisticated. We need to explore the difficulties
and problems that use of the evidence creates, in
particular setting the right balance between the need
to conduct a thorough assessment and getting a
timely decision. We need to examine some of the risks
to proper enforcement as well as the benefits.
Returning to the institutional expects and examines
relative merits of difficult bodies in the assessment of
evidence and the making of decision. Finally we may
draw some conclusions on for we have come from how
far we may still have to go. The development of
competition assessment is systems caricatured as a
journey from a form-based approach to effects based
approach has been replaced by case-by case
assessment of economics effects. There can be
economics based rules as well as law based rules. For
example, it is common to most competition systems
that cartel agreements between competitors are bad
and should be outlawed. This is based in part on a
distrust of secret conspiracies but also on the lesson
from economics that generally such agreements harm
consumers.
No system is going to lee entirely rule-based or
entirely effects-based much more likely is a system of
individual case assessment within an overall general
framework.
13
Usage of Economic Evidences
Parliament had first enacted the MRTP Act thereafter
the competition Act to promote equitable distribution
of wealth and economic power. The competition Act is
creation of the union legislature and there is
corresponding law enacted at the state provincial
level. The statements of the objects and reasons to the
competition act states the reason for enacting the
new law of the following word: the pursuit of
globalization, India has responded by opening up its
economy, removing controls, and restarting to
liberalization the objective of the competition Act be
further from its preambles which states as follows
An Act to provide, keeping in view of the economic
development of the country , practices having adverse
effect on competition, to promote and sustain
competition in markets, to protect the interest of
consumer and to ensure freedom of trade carried on
by other participants in markets in India the
competition act is drafted, is are most of the
competition laws in the world, in fairly general terms
and is not limited to the resolution of commercial acts
of private parties the competition act prohibits or
regulates (a) anticipative agreement (under section 3
and 4 of the act )(b) abuse of dominant position (under
section 4 of the act) (c) combinations (under section 5
and 6 of the act). As a quasi judicial body, the CCI is
bound with the principles of rule of law in giving
decisions 30 and doctrine of precedents. As per the
competition act the commission is duly empowered to
receive documents and testimony it by way of
evidence and therefore is well suited to adjudicate
disputes before it on the bases of material advert by
parties and by application principles of evidentiary
proof under the Evidence Act. This is important
science unlike the US suit for anti-competitive
practices cannot be brought in civil court. Nor does
cartel like conduct take the case outside the
jurisdiction of act. Further the scope of investigation
30
There are (a) predictability in judicial reasoning (b) uniform and
consistent application of law
of the federal trade commission (FIC) and the
department of justice are slightly different, however in
India, all cases relating to anti-competitive practices
can only be investigated by the CCI .the CCI may issue
and desist order or imposed a penalty not exceeding
10 percent of the advantage turn over during the
preceding three years from the date of order. In
cartel cases CCI could impose a penalty that could be
higher of either up to 10% of the turn over or three
times the amount of profit derived from the cartel
agreements. In the cases of contravention by
companies CCI may under the provision of section 40
of competition act proceed against and punish any
person who , at the time of violation was in-charge of
the company unless that person can show that the
violation was committed without his knowledge or that
he had exercised all the allegation to prevent the
violation .Section 43A provides that incase of failure to
notify a combination, Commission shall impose a
penalty of 1 % of the total assets or turnover of the
combination. Section 42A of the competition act
provides for the compensation in cases of
contravention of the order the CCI. This section
provides that the person can make an application to
the competition appellate tribunal for recovery of
competition from an enterprise for any loss or
damage suffered by him to violating the direction of
the CCI under section 27, 28, 32, 33 and 41 of the
Competition Act.31
CCs Use of Economic Evidence
While operate within accepted analytical orthodoxy
and legal framework, it is, in the last resort , free to
come to its own view on given case; and while it is
recognizes the great importance of the consistency
and predictability, it is in perhaps the best position to
make the difficulties assessments.32
31
http://www.cresse.info/uploadfiles/2015_pl2_pr3.pdf
32
http://www.rpieurope.org/Beesley/2009/Peter%20Freeman.
pdf
14
CCIS Evidentiary Practice
The first point to stress is that CC is interested in
evidence of all kinds so called direct or documentary
evidence including partys statements in submissions
or at transcribed hearing, strategy and board papers,
customer survey, and studies of the market- as well
as the other kinds of economic evidence that we are
considering. It is the CCs job to test all evidence
weighs it in the balance in coming to a decision. There
is no hierarchy of evidence- the weight attributed to
each item depend on its source, relevance and
reliability, all of which are tested by the process. In
doing this CC has tried to get closure to primary
evidence, including numerical date. Recently the CC
published its suggested best practice for the
submission of economic evidence. The purpose is to
ensure that the partys economics evidence can be
considered by CC without disruption or delay and will
thus be of greatest value. The essence is that
submission should clearly state the results and
conclusion as well as setting out the assumptions and
methodology used. Submission should contain a
complete description of the analysis. The CC may also
request raw and cleaned data to enable it to return
the parties analysis and replicate the results for
econometric model, it is also essential that the CC is
able to understand there underline assumption. Thus
CC may want to test econometric analysis for
robustness and will want appropriate evidence for this
purpose. These majors are all meant to ensure that
the CC has the best evidence available to it
Limitation
Can economic evidence capture the multi-
dimensions of consumer harm?
Whether economic evidence of efficiency,
technological innovation, quality is appropriate
with its emphasis on efficiency than on equity
dimensions?
Is complete emphasis on economic analysis and
market rationale appropriate at this stage of
economic development?
Rationale and 'economic approach' to Competition
Law and philosophy of the Commission is ingrained in
the preamble to the Competition Act, 2002.
Preamble refers to economic concepts of 'practices
that have adverse effect on competition'; 'promote and
sustain competition in markets'; 'protect the interests
of consumers.
Competition is not defined in the Act and neither is
appreciable adverse effect on competition.
Reading of the preamble must be seen in the context
of liberalization policies initiated in the '90's.
Market structures as an outcome of government
directions rather than of market forces.
Moreover, there is no competition policy which asserts
a commitment to competition and markets, as yet in
India. The law and its implementation has preceded the
policy.
Statutory provisions (Section 19 & 49) place a heavy
responsibility on the Commission persuading
interventions into domains that falls in the realm of
government regulations and policies or other
mechanisms such as taxation, certification etc.
Conclusion
It might be more fruitful to continue to clarify in any
given case what it is that the economic evidence
shows, what are its limits and what is the scope for
agreement and to keep working on procedures to
make these things ascertainable and possible within
the limits of administrability and a reasonable time
frame. Economic evidence and the experts who
provide it may still have need to trust the evidences
and do the work to get the results out at once.
15
 CONTENTS

6. Anti-competitive Agreements in Competition Law

Part II 7. Circumstantial Evidences for Prosecution of Anti-

competitive Agreements

Anti-Competitive Agreements 8. Adverse Effect & Appreciable Adverse Effects on

Competition- A Study

9. Exceptions in Anti-Competitive Agreements

10. International Cartels & Adverse Effect on

Competition in India

16
 Chapter 6
Anti- Competitive Agreements in Competition
Law
(Mr. Srijan Sinha & Ms. Ritu Saxena)33
Introduction
With the dynamic trends in todays extremely
competitive economic market scenario, the
emergence of an altogether new age of competition
laws in India has been one of the utmost important
changes which had been hitherto nonexistent. The
factors such as Indias changed and overhauled
economic policies, removal of trade barriers and all
the pro-trade changes, almost instantly led to a
paradigm shift in the Indian economic market sphere.
This concerned the authorities as it conferred upon
them a responsibility to regulate the market forces.
Thus, it was necessary for the legislature to make
such laws which would ensure fair competition for the
benefit of consumers and smooth functioning of
market, and though still not impose complete arbitrary
external regulation by legislation. Thus with this view,
Competition Act, 2002 was brought about after a
couple of amendments after its predecessor the MRTP
Act, was repealed.
The competition act provides for avoiding certain
discrepancies and irregularities which would arise out
of unfair trade practices, as a result of free and open
market economy.
One such discrepancy can be in the form of Anti
Competitive Agreements, as it has been observed by
National Consumer Disputes Redressal Commission:
"Even in any free economy/deregulated
economy exploitation of the borrower/debtor is
33
Students of B.Com., LL.B. (Hons) 6 th Semester
prohibited and is considered to be unfair trade
practice. Free economy would not mean license to
exploit the borrowers/debtors by taking advantage of
their basic needs for their livelihood. This cannot be
permitted in any civilized society - maybe a
deregulated free market economy. "34
Section 3 of the Competition Act states that any
agreement which causes or is likely to cause an
appreciable adverse effect (AAE) on competition in
India is deemed to be anticompetitive. Thus, it has
been observed that the role of the new competition
policy is to cater against all sorts of anti competitive
practices, formulated as per the report of a High Level
committee, appointed by the Government of India,
named- Raghavan Committee Report, 2000.
Therefore, the primary objective of Competition policy
is to achieve: Unhindered market access economic
growth social welfare all round efficiency by- effective
allocation of resources, maximum production, and
dynamic innovation.
The competition Act mainly focuses upon:
Prohibition of anti competitive agreements
Prevention of Abuse of Dominant position
Regulation of combinations
Establishment of Competition Commission of
India- which is the regulatory and
adjudicatory body, having quasi judicial, quasi
legislative and executive functions with
respect to the competition in market.
Anti Competitive Agreements
The provisions of competition Act, 2002 have been
influenced and adopted by pre-developed framework
of competition laws in the U.S. and U.K. legal systems.
Also the related legislations of the European legal
34
Awaz v. Reserve Bank of India and DCM Financial Services Ltd.
v. Mukesh Rajput, 2008 Bus L R764 (NCDRC), the National
Consumer Disputes Redressal Commission, while deciding the
issue of interest on credit taken on the basis of credit cards
(joint order)
2
system also influenced the Indian Competition
regulatory machinery.
Sub Clauses (1) and (2) of Section 3, of Competition
Act defines anti competitive agreements and provides
that any contravention with respect to such
agreements shall be void. Under the sub clause (3),
the section mentions factors:
1. No enterprise or association of enterprises
or person or association of persons shall
enter into any agreement in respect of
production, supply, distribution, storage,
acquisition or control of goods or provision
of services, which causes or is likely to
cause an appreciable adverse effect on
competition within India.
2. Any agreement entered into in contravention
of the provisions contained in Sub section (1)
shall be void.
Section 3 of the Competition Act provides that Any
agreement entered into between enterprises or
associations of enterprises or persons or
associations of persons or between any person and
enterprise or practice carried on, or decision taken
by, any association of enterprises or association of
persons, including cartels, engaged in identical or
similar trade of goods or provision of services,
which
a) directly or indirectly determines purchase or
sale prices;
b) limits or controls production, supply,
markets, technical development, investment
or provision of services;
c) shares the market or source of production
or provision of services by way of allocation
of geographical area of market, or type of
goods or services, or number of customers
in the market or any other similar way;
d) directly or indirectly results in bid rigging or
collusive bidding, shall be presumed to have
an appreciable adverse effect on competition
Appreciable Adverse Effect on Competition
Section 3 mentions the term Appreciable Adverse
Effect on Competition (AAEC) under its sub clause (1)
and sub clause (3), although the term is not expressly
defined under the Competition Act. AAEC is a
phenomenon which is observed when the provisions of
the Act are contravened to negatively affect the
market players and healthy competition in market. It is
important to note that the AAEC should only be
adjudged with reference to Indian economic market
only, i.e. AAEC caused within India. Sub clause (3) also
mentions determining factors while having
presumption of the fact that AAEC has been caused.
This presumption can be made if the agreement in
question or a mutual or multilateral decision taken
between more than one market players, leads to any
of the four mentioned factors under sub clause (3).
Competition authorities around the world have been
vigilant regarding the infringement of competition in
the relevant market. The European commission,
competition watch dog for the European markets, has
been one of the earliest competition authorities and a
source of inspiration for the CCI.
However, with the inclusion of a proviso to section
3(3), the intent of the legislature is to exclude certain
agreements from the purview of being tagged as anti
competitive in nature and thus causing AAEC. The
effect of this proviso is that any agreement entered
into by way of joint ventures if such agreement
increases efficiency in production, supply, distribution,
storage, acquisition or control of goods or provision of
services, shall not be presumed to have caused an
AAEC.
Bid Rigging and Collusive Bidding
Explanation to sub clause (3) of section 3 explains the
term bid rigging or collusive bidding for the
purposes of section 3 (3) d, which says that an
agreement resulting in bid rigging or collusive bidding
shall be presumed to have an AAEC. Bid rigging is an
3
outcome of horizontal anti competitive agreements.
According to the explanation- "bid rigging" means any
agreement, between enterprises or persons referred
to in sub-section (3) engaged in identical or similar
production or trading of goods or provision of
services, which has the effect of eliminating or
reducing competition for bids or adversely affecting
or manipulating the process for bidding.
Agreements:
The term agreement finds a detailed mention under
the Competition Act under section 2(b), which provides
Agreement includes any arrangement or
understanding or action in concert:
(i) Whether or not, such arrangement, understanding
or action is formal or in writing; or
(ii) Whether or not such arrangement, understanding
or action is intended to be enforceable by legal
proceedings;
The competition Act does not specifically use the
terminology, but section 3(3) and 3(4) indirectly
classifies agreements into two forms, for the purpose
of ascertaining the anti competitive nature.
Horizontal Agreements
Section 3(3) discusses about a specific class of
agreements including cartels which are to be
presumed to be anti competitive. Horizontal
agreements are agreements between enterprises,
group of enterprises, persons or group of persons,
engaged in trade of identical or similar products.
Horizontal agreements are entered between two or
more competitors at same level of activity, for
example- producers, distributers, manufacturers.
Usually the essence and purpose of horizontal
agreements is to generate policies regarding
production, distribution and price fixation. Also such
agreements provide a channel for sharing of
information which can usually be price sensitive and
may influence the market. Such practices adversely
affect competition by prompting antitrust law
violations. Horizontal agreements also affect prices
and quality of products in the market.
Section 3(3) broadly provides for the restriction of
following as being anti competitive in nature-
Agreements, practices, and decisions. Cartels are also
brought under the purview of being anti competitive
under this section. The types of horizontal agreements
which are considered to be anti competitive under
section 3(3) are:
i. Agreements that directly or indirectly determine
purchase or sale prices
ii. Limits or controls production, supply, markets,
technical development, investment or provision of
services
iii. Shares the market or source of production or
provision of services by way of allocation of
geographical area of market, or type of goods or
services, or the number of customers in the market
or any other similar way
iv. Directly or indirectly results in bid-rigging or
collusive bidding
Vertical Agreements
Vertical agreements are the agreements at different
stages or different levels of market chain. The section
provides for various types of vertical agreements
under sub clauses (a) to (e). If AAEC is found to have
been or is likely to have been caused by such
agreements, then it would be considered to be in
contravention to section 3(1); i.e. Such agreements
shall be considered as agreements in respect of
production, supply, distribution, storage, acquisition or
control of goods or provision of services, which
causes or is likely to cause an appreciable adverse
effect on competition within India.
4
The most common vertical agreements are:
Tie-in- Arrangement [sec.3(4)(a)]
It means imposing a condition on the purchaser of
goods, to purchase some other goods and thus selling
goods which is not of purchasers choice.
Exclusive supply agreement [sec.3(4)(b)]
Exclusive supply means that there is only one buyer
inside the Community to which the supplier may sell a
particular final product.
Exclusive distribution [sec.3(4)(c)]
In an exclusive distribution agreement, the supplier
agrees to sell his products only to one distributor for
resale in a particular territory.
Refusal to Deal [sec.3(4)(d)
It means any agreement which restrict by any method
the persons or classes of persons to whom goods are
sold or whom the goods are brought.
Resale Price Maintenance [sec.3(4)(e)]
It means any agreement to sell goods on condition that
the prices to be charged on the re-sale by the
purchaser shall be the prices stipulated by the seller
unless it is clearly stated that prices lower than those
prices may be charged shall be deemed re-sale price
maintenance agreement.
Determination Of Anti Competitive Nature of
Agreements
Various courts around the world and in India have
formulated the following rules to determine the anti
competitive nature and effect of the agreements:
Rule of Reason
Per Se Rule
Rule of reason
The doctrine of Rule of reason was first stated and
applied by the Supreme Court of
U.S.A. in its interpretation of the Sherman Act in the
case of Standard Oil Co. of New Jersey v. United
States35. Under this judgment, the supreme court of
United States observed that any restraint on the
market or competition under the then applicable
Sherman Act would be anti competitive until it is for
promotional and pro competitive purposes. Also the
positions before and after the agreement came into
force must be ascertained to evaluate the true nature
of the agreement, whether it has actually caused any
harm to the competition or not. Apart from this, the
future probabilities of a negative effect upon the
competition, is also to be considered to adjudge the
agreement as anti competitive.
In formal terms: The Rule of reason is a legal approach
by competition authorities or the courts where an
attempt is made to evaluate the pro-competitive
features of a restrictive business practice against its
anticompetitive effects in order to decide whether or
not the practice should be.36
Rule of reason is however only applicable over the
class of Vertical agreements, the agreements
mentioned under section 3(4) of the competition act
2002. It has been observed that some market
restrictions which prima facie seem to be
anticompetitive may on further examination be found
to have valid efficiency-enhancing benefits.
Per Se Rule
The per se rule, as defined by the Merriam-Websters
legal dictionary is- A rule that considers a particular
restraint of trade to be manifestly contrary to
competition and so does not require an inquiry into
35
221 U.S. 1 (1911)
36
http://stats.oecd.org/glossary/detail.asp?ID=3305 Khemani
R.S., Shapiro D.M. Glossary of IndustrialOrganisation Economics
and Competition Law, 1993.
5
precise harm or purpose for an instance of it to be
declared illegal.

Agreements under section 3(3) of the competition act

2002, or Horizontal agreements are considered to be
illegal and anti competitive ab-initio, i.e. from the very
beginning.

Agreements leading to collective boycotting, market

division, price fixation and tying in arrangements are
subjected to be adjudged as anti competitive per se.
such restraints falling under the category of
horizontal agreements, cause an irredeemable harm
to the market competition.

The Per se rule, as a concept was originated by the US

supreme court in 1898, the case Addyston Pipe &
Steel Co. v. U.S.37. This was also a rule formulated at
the time of sherman act being in force in the United
States. The agreement in question under this case was
for the outright purpose of BID RIGGING by formation
of a CARTEL. The court opined that the agreement had
a direct economic impact and was of such nature that
it could not be considered for a partial or limited
restraint.

37
175 U.S. 211 (1898)

6
 Chapter 7
Circumstantial Evidences for Prosecution of
Anti-Competitive Agreements
(Mr. Kartikey Tiwari & Ms. Shivali Misra)38
Introduction
Circumstantial evidence is employed in anti-
competitive agreements in all countries. The better
practice is to use circumstantial evidence holistically,
giving it cumulative effect, rather than on an item-by-
item basis. Complicating the use of circumstantial
evidence are provisions in national competition laws
that variously define the nature of agreements that
are subject to the law.
National treatment of anti-competitive agreements,
such as whether they are prosecuted as crimes or as
administrative violations, can affect the burden of
proof that applies to the cases, and hence the use of
circumstantial evidence. It can be difficult to convince
courts to accept circumstantial evidence in such
cases, especially where the potential liability for
violating the competitive provisions of the competition
law is high.39
In most countries, anti competitive agreements (and
other violations of the competition law) are
prosecuted administratively. The principle
administrative sanctions applied to this conduct are
fines, usually only assessed against organizations but
sometimes against natural persons, and remedial
orders. In a minority of countries, but a growing one,
anti competitive agreements are prosecuted
criminally. In most instances the burden of proof
facing the competition agency is higher in a criminal
38 th
Students of B.Com., LL.B. (Hons) 6 Semester
39
Prosecuting without direct evidences, available at:
www.oecd.org (Last visited Feb 17, 2017)
case. The result is that it is usually more important
that direct evidence of agreement be generated in
these cases.
There are different types of circumstantial evidence.
One is evidence that cartel operators met or
otherwise communicated, but does not describe the
substance of their communications. It might be called
communication evidence for purposes of this
discussion. It includes:
Records of telephone conversations
between competitors (but not their
substance), or of travel to a common
destination or of participation in a meeting,
for example during a trade conference.
Other evidence that the parties
communicated about the subject e.g.,
minutes or notes of a meeting showing that
prices, demand or capacity utilization were
discussed; internal documents evidencing
knowledge or understanding of a
competitors pricing strategy, such as an
awareness of a future price increase by a
rival.40
A broader category of circumstantial evidence is often
called economic evidence. Economic evidence
identifies primarily firm conduct that suggests that an
agreement was reached, but also conduct of the
industry as a whole, elements of market structure
which suggest that secret price fixing was feasible,
and certain practices that can be used to sustain anti
competitive agreement.
Since members of a cartel work to avoid detection, it
is rare to find any direct evidence of its existence.
Thus, investigating authorities in various countries
rely upon a holistic evidence of circumstantial
evidence to determine the existence of a cartel.
40
Use of circumstantial evidence to establish the existence of
cartel, available at:
https://thecompetitionlawblog.wordpress.com (Last visited on
Feb 17, 2017)
7
Circumstantial evidence is of two types
communication and economic evidence. Economic
evidence may be further classified as conduct and
structural evidence.
Communication evidence is given the most weight. It is
merely evidence that the members of the alleged
cartel met or otherwise communicated and does not
include the content of their communication. This may
include records of phone conversations, evidence of
travel to a common destination or records of
meetings that the members convened.
Economic evidence is ambiguous and in most cases is
not sufficient by itself to prove the existence of a
cartel agreement. Structural economic evidence
refers to the presence of certain structural features
in the market that are conducive to the formation of
cartels. These include high concentration, high entry
and exit barriers, homogeneous products, similar
production costs etc. Conduct evidence is evidence of
similar and parallel conduct of competitors. It is more
persuasive if the conduct would not make economic
sense for the participants unless acting in their self-
interest. For example, a sudden increase in the prices
of a product by all manufacturers would be considered
conduct evidence. In the absence of any external
factors to explain the price rise, it may be inferred
that the manufacturers would not have raised the
prices unless they had reason to believe that the other
firms would do the same.
Conduct evidence is the single most important type of
economic evidence. Observation of certain, suspicious
conduct frequently triggers an investigation of a
possible cartel. Careful analysis of the conduct of
parties is important to identify behavior that can be
characterized as contrary to the parties unilateral
self-interest and which therefore supports the
inference of an agreement. Conduct evidence includes,
first and foremost:
Parallel pricing - changes in prices by rivals
that are identical, or nearly so, and
simultaneous, or nearly so. It includes other
forms of parallel conduct, such as capacity
reductions, adoption of standardized terms
of sale, and suspicious bidding patterns, e.g.,
a predictable rotation of winning bidders.
Industry performance could also be described as
conduct evidence. It includes:
abnormally high profits;
stable market shares;
a history of competition law violations.
Evidence related to market structure can be used
primarily to make the finding of anticompetitive
agreement more plausible, even though market
structure factors do not prove the existence of such
an agreement.
Relevant economic evidence relating to market
structure includes:
high concentration;
low concentration on the opposite side of the
market;
high barriers to entry;
high degree of vertical integration;
Standardized or homogeneous product.
The evidentiary value of structural evidence can be
limited, however. There can be highly concentrated
industries selling homogeneous products in which all
parties compete. Conversely, the absence of such
evidence cannot be used to show that anti competitive
behavior did not exist. They are known to have existed
in industries with numerous competitors and
differentiated products. A specific kind of economic
conduct evidence is .facilitating practices- practices
that can make it easier for competitors to reach or
sustain an agreement. It is important to note that
conduct described as facilitating practices is not
necessarily unlawful. But where a competition
authority has found other circumstantial evidence
pointing to the existence of agreement, the existence
8
of facilitating practices can be an important
complement. They can explain what kind of
arrangements the parties set up to facilitate the
formation of anti competitive agreement, monitoring,
detection of defection, and/or punishment, thus
supporting the collusion story put together by the
competition law enforcer. Facilitating practices
include:
information exchanges;
price signalling;
freight equalization;
price protection and most favored nation
policies; and
unnecessarily restrictive product standards
The Commission has relied upon circumstantial
evidence in prosecuting anti competitive cases. For
example, in the LPG Gas Cylinder case, the
Commission held that 48 manufacturers had colluded
in bidding for tender notices by the public sector oil
marketing companies for procurement of liquefied
petroleum gas (LPG) cylinders. The Commission relied
upon the fact that not only was the characteristics of
the particular market conducive to collusion, but also
near identical prices were being charged for the LPG
cylinders in each state, despite the manufacturers
having different costs and location, participation in
pre-bid meetings and use of common agents to submit
bids. In Aluminum Phosphide Tablets case, one of the
principal evidence against the three manufacturers of
aluminum phosphide tablets was the fact that the
officers of the alleged conspirating firms had entered
the office of the Food Corporation of India (FCI) to
submits bids together and one such officer had
entered the details of the others in the visitor book of
FCI. The Commission found that such conduct was
evidence of the existence of a pre-determined
conspiracy among such firms.41
41
Circumstantial Evidence And Dawn Raids: A New Era Of
Antitrust Investigation In India, available at:
http://www.manupatrafast.com (Last visited on Feb 17, 2017)
In the case of Italy Baby Milk, The Authority noted
that since it began its case in 2004, prices of baby
milk had declined by 25% and there had been other
precompetitive developments in the market, including
more advertising and consumer information, the
introduction of new products and a greater presence
of the respondents products in supermarket chains.
Here is a list of the types of evidence apparently
uncovered by the authority:
direct evidence: the producers apparently
agreed on a maximum price reduction;
communication evidence: the producers had
met at the trade association and discussed
prices, although with the exception of the
maximum price reduction there was no
direct evidence that they had reached an
agreement;
conduct evidence: parallel pricing; steep
price reductions and increased competition
following the investigations which suggested
that earlier high prices were not the result
of competitive behavior;
conduct of the entire industry: across the
board, the prices were significantly higher
than in other European countries;
market structure evidence: this was a highly
concentrated industry with only three
independent suppliers, and they sold a
relatively homogenous product; and
Facilitating practices: recommended resale
prices for pharmacies with significant price
transparency, sales occurred predominantly
through pharmacies which eliminated outlets
such as grocery stores that likely would have
used discount prices.
Likely Impact of the Vitamin Cartel During the
duration of the vitamin cartels, vitamin prices were
increased from 60 percent to 100 percent. In terms of
direct overcharges on buyers, the total amount
worldwide was about US$7bn. Buyers in North
America, the European Union (EU), and Asia incurred
9
roughly 90 percent of the global cartel overcharges.
The sales of these global cartels occurred in virtually
every country in the world, but were concentrated in
North America (20 percent), the European Economic
Area (29 percent), and Asia (55 percent). For all of the
cartels together the overcharges amounted to more
than 40 percent of affected world commerce.
Outcome Almost all of the private vitamins cases
were settled. The only vitamins case that went to trial
was the chlorine chloride conspiracy, where the jury
decided that the cartel had overcharged purchasers
as the defendants had conspired to fix the price of
chlorine chloride. In 1999, six of the main vitamins
companies agreed to a settlement in the private class-
action litigation brought in federal court on behalf of
direct purchasers of vitamins and vitamin premix.
Later in 2000, the Justice Department announced
guilty plea agreements from two Swiss nationals and
two German nationals, of whom three were high
officers in BASFs Fine Chemicals Division and one was
in a similar position at Roche. In the same year, two
more German pharmaceutical manufacturers (Merck
and Degussa-Huels Ag) were added to the list, along
with two US firms (Nepera, Inc., and Reilly Industries).
These guilty pleas involved the vitamin C and vitamin
B3. Fourteen chemical companies were convicted by
the US for price-fixing in the vitamins market. US fines
for these fourteen companies and fifteen of the
officers were US$915mn. Two firms received
amnesties from the DOJ under the leniency program.
Additionally, sixteen senior executives of the vitamins
manufacturers were criminally indicted, of which
fifteen received personal sentences.42
Members of a anticompetitive agreements realize that
their conduct is unlawful and that in the event that
they are caught, the penalty is likely to be significant.
It is not surprising for anticompetitive participants to
try and hide their anti-competitive conduct, forcing
investigative authorities to resort to circumstantial
42
Study of Cartel case, available at: http://www.cci.gov.in/ (Last
visited Mar 13, 2017)
communication and economic evidence to build and
prove their case. Perhaps it is in recognition of this
reality that the 2002 Act defines agreement broadly,
bringing within its ambit informal, unwritten
arrangements and similar forms of concerted action.
The Organisation for Economic Co-Operation and
Development (hereinafter OECD) has published a
paper in 2006, which argues that, in the likely event
that direct evidence is not available, a better practise
is to use circumstantial evidence: holistically, giving
its cumulative effect, rather than on an item-by-item
basis. The Report observes, however, that the risk
associated with the subjective application of
circumstantial evidence - such as mere proof of
information exchange - is not in itself enough to prove
agreement between parties. Circumstantial evidence
may be relied on, but has to conclusively exclude the
possibility that the acts were independent decisions of
competitors.
Remarkably, the Commission cites this Report in both
the Cement and Tyre Cartel cases, but seems to apply
its recommendations selectively. An analysis of the
reasoning in these cases suggests that the
Commission has failed to set a uniform threshold to
establish anticompetitive. The difficulty or inability to
accurately measure whether market forces of demand
and supply caused companies to respond in prices in
similar ways cannot directly lead to the inference that
such market forces did not facilitate the determination
of price. Communication evidence is evidence that
cartel operators met or otherwise communicated, but
does not describe the substance of their
communications. Providing pricing information to a
third party trade association is often inadequate
circumstantial evidence. Yet, in the Cement case, the
Commission found that examples of such
communication were sufficient, in spite of signs
explaining that the conduct of Cement manufacturers
was consistent with their self-interests. Moreover, the
oligopolistic market type and similarity in demand and
10
pricing of almost identical products was seen as a
sufficient justification in the Tyre case, but discarded
in the Cement case. In another case, All India Distillers
Association v. Haldyn Glass Gujarat and Others, the
Commission did not even send the matter for further
investigation by the DG in circumstances nearly
identical to the facts in the Cement case. The allegation
in this case was also of simultaneous price increase
by glass bottle manufacturers, which could not prima
facie be explained by price fluctuations of raw
materials, and where the market was homogeneous
and oligopolistic in nature.43
probabilities, the existence of the anti competitive
agreement. Considering the high liability for violation
of Sec. 3, there has been some skepticism regarding
building a case on circumstantial evidence. However,
the CCI has come to accept that in the absence of
direct evidence, communication and economic
evidence may be sufficient to establish the existence
of an anti competitive agreement.

More interesting are cases in which no documentary

evidence is available whatsoever to prove the
existence of the cartel. These are the cases in which
the inclusion of concerted practice in Article 101
becomes significant. In the Dyestuffs Case, for
example, the Commission inferred the existence of an
agreement using only the behavior of undertakings.
The only evidence presented suggested that
undertakings met and discussed prices, increased
prices simultaneously by similar percentages, and
used similar language in their instructions to
subsidiaries. Upon appeal, the Court reiterated this
position, clarifying that when the behavior of firms
does not reflect their expected behavior in conditions
of competition, an inference of collusion may be made.
What makes this case problematic is that the Court
also, separately, referred to evidence of collusion. It
must also be kept in mind that in circumstances of this
sort, the concerned undertakings must be afforded the
opportunity to offer alternate explanations for their
parallel conduct, making the precedent value of this
case suspect.

The basic problem with circumstantial evidence is that

there is no fixed standard to be met. The regulating
authority is required to consider all available evidence
holistically to determine, on a preponderance of

43
The Cement and Tyre cartels, available at:
http://www.indialawjournal.org/ (Last visited Mar 13, 2017)

11
 Chapter 8
Investigations & Evidences in Horizontal &
Vertical Cartels
(Ms. Samiksha Gupta & Ms. Avantika Bajpai)44
Introduction
Word competition used in treat is significant for the
consumer point to view competition in the open
market is beneficial to the consumer if monopoly
entered into a trade the manufacturer and producer
of the goods take undo advantage of its product for
the reason that nobody to compete as product and
continuity the manufacture of producer of the good or
services dictate the terms to the consumer of Good
and Services. The consumer has no option in the open
market in respect of Good and Services when the
product or services are introduce in the market.
Manufacturers the producer of any particular type and
if there are more producer or manufacturer of
services and goods then the consumer have an option
to choice this option of consumer is a backbone of
competition act. which was introduced to prevent
practices having adverse effect on competition, to
promote and sustain competition in markets, to
protect the interests of consumers and to ensure
freedom of trade carried on by other participants in
markets, in India. To monitor such activities the
competition act was introduce to create a body for
monitoring and to prevent unfair practise in trade with
the paramount consideration to protect the interest of
consumer of goods and services which is now name as
competition commission section 3 of the act. Provides
prohibition of agreement which are anti-competition
meaning then by such agreement which has be
entered into by enterprises or association of
enterprises or person, or association of person in
44
Students of B.Com., LL.B. (Hons) 6 th Semester
respect of production supply, distribution, storage
acquisition of control of goods or provision of services
which cause or is likely to cause on actionable adverse
effective on competition in India. If any such
agreement is entered into the same shall be void and
cant be enforced. Such agreement is called horizontal
cartels agreement.
Word Cartels has been defined in section 2(c) of the
competition act. So an agreement into as an
association of producers and sellers, distributors,
traders or services provider who by agreement
amongst them self limit control or attempt to control
the production, distribution, sale or price of any trade
and goods of provision of service to achieve they
objectives of the act themselves cartels would be legal
and valid and is known as vertical cartels.
Now question arises that on what basis and what
evidences it could be determine whether a particular
cartel is vertical or horizontal?
First of all it is necessary to look into the agreement
between the parties.
Secondly, whether it was validity entered by the
competent person with was meaning of law. Any if any
such agreement entered into in accordance in
contract act then other thing a necessary to a certain
a the nature of cartels. The nature of cartels could not
be gathered by the continuance of the agreements
which constituent term and condition.
If the terms and condition are such which falls in
section 3(3) of the act that shall amount to
appreciable/ actionable adverse effects of
competition law.
A part form this terms and conditions the nature and
quality of goods and services provided to the
consumers in seen in light of representation made by
the manufacturer or producers of goods and services.
If dont fulfill to representation in respects of quality
or quantity of goods and services then in respective of
fact that whatever may be terms and condition of
12
cartel that act of the producer or manufacturer will witness the commission may form an opinion
amount to appreciable adverse effect of competition regarding effect on competition and to decide whether
therefore, a certain by investigation as contain in particular cartels is horizontal and vertical in case the
section 19 by the commission the terms of the cartels, tribunals reaches.
actual practices in trade in respect of goods and
On the conclusion that it has appreciable adverse
services which create barrier to new entrance in the
effect or competition may pass situation orders to
market or defeat existing competitors by creating
prevent the adverse effect. All to promote healthy
entrance. In the market and which create loss to
competition with intend to promote and protect the
approval of benefit to consumers has to be seen so
interest of consumers.
like other activities of interpreter which ultimate
appreciable adverse effect on competition from part
of the evidence.

The commission being the authority of monitoring of

such activities and have been empowered to take
action. Ample powers have been comfort upon
commission by statute. The competition act to give
more effectively and sharpness to the act of 2002
certain amendment has been introduced in year 2007
power to issue interim ores by uncertain section 33
the commission power has been sharpest by section
36 commission has been empowered to regulate own
procedure and it doesnt bound to follow the
procedure of CPC or Indian evidence act however for
summoning of enforcing the attendance of any person
recognising, discovering of affidavits ensure
commission for examination of witness or document
and recuing the provision of CPC can be invoked any
public record or document from any office.

This shows that collecting the evidence or appraisable

creating the evidence in the enquiring the provision of
evidence act would not apply and commission is
satisfied with oral or document evidence produce
before it satisfied the conscience of commission would
be sufficient to take it into consideration for enquires
purpose. So it concluded in way that, to judge a
particular cartel is appreciable adverse effect of
competition the evidence collection may be production
of documentary evidence or through evidence. On the
basis of evidence produce before commission, if
commission is satisfied with the generous of
document and trust worthiness of the statement of the

13
 Chapter 9
Appreciable Adverse Effect on Competition: A
Study
(Mr. Sarvesh Sen & Ms. Sonal Chauhan)45
Introduction
To bring in the application of Section 3, it is pertinent
that the effect on competition must be appreciable.
The term appreciable adverse effect on competition,
used in section 3(1) has not been defined in the Act.
The determination of appreciable has proved to be a
main problem under the Competition Act. It is to be
considered appreciable; the effect has to be
substantial. However; this may not be in line with
Indian economic interests. Accordingly, a more
appropriate meaning has been given in Law Lexicon
where appreciable is defined as capable of being
estimated, weighted, judged of or recognized by the
mind which is perceptible but not a synonym of
substantial. For the most practical purposes
appreciable has to be more than just a detectable
effect but may not be substantial.
Section 19(3) of the Act states that while determining
whether an agreement has an appreciable adverse
effect on competition under section 3, the commission
shall give due regard to all or any of the following
factors:
creation of barriers of new entrants in the
market;
driving existing competitors out of the
market;
foreclosure of competition by hindering
entry into the market;
accrual of benefits to consumers;
45
Students of B.Com., LL.B. (Hons) 6 th Semester
improvements in production or distribution
of goods or provision of services;
Promotion of technical, scientific and
economic development by means of
production or distribution of goods or
provision of services.46
The first three relate to the negative effects on the
competition while the remaining three relate to
beneficial effect. In Automobiles Dealers Association v.
Global Automobiles Limited & Another, CCI held that it
would be prudent to examine an action in the backdrop
of all the factors mentioned in Section 19(3). The
agreement should be the cause of the adverse effect
on the competition. Even if such a consequence is
probable, the agreement is anti-competitive. The
probability and not mere possibility of its consequence
as appreciably affecting competition is the
requirements.
Competition law usually places anti-competitive
agreements in two categories of horizontal and
vertical agreements. The horizontal agreements are
viewed more seriously than vertical agreements. The
Act doesnt specifically use the terms horizontal
agreement and vertical agreement. However, the
agreements referred in section 3(3) are horizontal
while those referred in section 3(4) are vertical
agreement.
Horizontal agreements refer to agreements among
competitors, i.e., agreements between two or more
enterprises that are at the same stage of the
production chain and in the same market. A distinction
is also made between cartels a special type of
horizontal agreement and other horizontal
agreements. The Act provides for the following four
kinds of horizontal agreements, which are presumed
to be anticompetitive.
(a). Agreements regarding prices: Agreements that
directly/indirectly fix purchase/sale price;
46
http://www.lawctopus.com
14
(b). Agreements regarding quantities: Agreements
aimed at limiting or controlling production, supply,
markets, technical development and investment;
(c). Agreements regarding market sharing:
Agreements for sharing of markets by geographical
area, types of goods/services and number of
customers; and
(d). Agreements regarding bids (collusive tendering
and bid rigging): Tenders submitted as a result of joint
activity or agreement.47
Such agreement may lead to a cartel, which is
pernicious. Cartels have an unfavorable effect on
competition and anti-trust legislation all across the
world try to curb them. Unlike the MRTP Act, the
Competition Act explicitly defines Cartels. They are
placed under Section 3(3) where there is a presumed
appreciable adverse effect on competition.
Factors Determining Adverse Effect
The Commission has been put under obligation, while
determining whether an agreement has an appreciable
adverse effect on competition under section 3, to have
due regard to all or any of the following factors,
namely:
(a) creation of barriers to new entrants in the market;
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into
the market;
(d) accrual of benefits to consumers
(e) improvements in production or distribution of
goods or provision of services;
(f) promotion of technical, scientific and economic
development by means of production or distribution of
goods or provision of services.48
47
http://www.lawctopus.com
48
. www.lakshmisri.com
Agreements Having Appreciable Adverse Effects
on Competition
When an agreement can be stated to have an
appreciable adverse effect on competition was the
question that arose before the Competition
Commission of India.
A reference was filed under Section 19(1)9(b) of the
Competition Act, 2002, alleging opposite parties of
indulging into bid rigging and market allocation while
bidding against the Tender Enquiry floated for
concluding Rate Contracts pertaining to a product
(Polyester Blended Duck Ankle Boot Rubber Sole) for
the relevant period. It was stated that opposite parties
had reached an agreement among themselves.
The definition of agreement as given in section 2(b) of
the Act requires inter alia any arrangement or
understanding or action in concert whether or not
formal or in writing or intended to be enforceable by
legal proceedings. The definition, being inclusive and
not exhaustive, is a wide one. The understanding may
be tacit, and the definition covers situations where the
parties act on the basis of a nod or a wink.
The legal position under the provisions of Competition
Act, 2002 provides that any agreement having an
appreciable adverse effect on competition within India
is prohibited and is void. Such agreement, including an
action or decision, by or between, the parties
concerned shall mean to cause appreciable adverse
effect if the agreement has a force of limiting or
controlling product and services at any stage and
which directly or indirectly results in bid rigging or
collusive bidding. To reverse such presumption, the
burden of proof is on the opposite parties to prove
that the intended purpose was to ensure benefits to
end users or the consumers.
The prime reason forming the base of allegation in the
instant case was a very narrow difference in prices
quoted by bidders and also restricting the quantity of
the product to be supplied during the Rate Contract
period. The Directorate General in the investigation
15
concluded that the bidders indulged in bid rigging or
collusive bidding.
The Commission while disposing of the issue preferred
the principle of preponderance of probabilities over
direct evidence as the existence of an anti-competitive
practice or agreement has to be inferred from
coincidences and indicia which once taken together in
the absence of plausible explanation can lead to a
conclusion that an agreement causing or is likely to
cause appreciable adverse effect on competition exist.
The Commission observed that quoting near identical
rates is suggestive and indicative of formation of a
cartel. In the instant matter, the parties concerned
were located in different geographical locations, had
different tax structure to follow. They all were part of
the common platform i.e. a Trade Federation and they
all failed to give plausible explanation for giving near
identical quotes. It was in these circumstances, it was
held that the parties concerned had entered into an
agreement to determine prices besides bid rigging/
collusive bidding.49
Case
An agreement which causes appreciable adverse
effect on competition in India in respect of
production, supply, acquisition, control of goods and
services is void as stated in subsection (2) of section
3 of the Act. Sections 3(1) and 3(2) do not deal only
with the supply side of the market. A market works on
the principle of demand and supply. The assumption
here is that a consumer would make a decision to
purchase or sell in a rational manner so as to
maximize gains to it. If an enterprise deals with an
individual by entering into an agreement which causes
an adverse effect to competition in India would be
hit by Sections 3(1).
It has also been argued that the levy of penalty for the
foreclosure of loans creates a healthy competition in
the market and the bank industry. Further with the
49
http://www.tcl-india.net
existence of PPC the banks are showing very high
prots and therefore PPC did not have any adverse
effect on competition. It was also argued that
banning PPC would have an adverse effect on
competition. It has also been argued that the levy of
penalty on the borrowers by the banks is beneficial to
the consumers. Though these arguments were
advanced no material was provided in support of these
arguments. It could be possible that high prots of the
banks/Hl-"Cs were due to the prepayment penalties of
due to large home loan market. No bank furnished the
details of their earnings through prepayment
penalties.
In view of the above noted factual position, the issues
are to be examined with reference to the Competition
Act, 2002. The question here is of switching charges
which a consumer has to pay in the form of
prepayment penalties. There is no doubt that by
charging pre-payment penalty the banks reduced the
choice of the customers. As a consequence of the
prepayment penalty, a customer cannot shift from one
bank to another. Further when a new bank enters the
market it would not be able to get customers from the
other banks because the customer would not like to
shift in view of the penalties which he would have to
pay if he shifts to a new bank. Thus by levying the pre-
payment penalties banks are killing competition in the
home loan market. This also leads to decrease in the
Allocative efficiency of the market and a reduction of
innovation. Under the provisions of Section 3(1) of the
Act, no supplier of goods and services can enter into
an agreement which causes or is likely to cause an
appreciable adverse effect on competition. In all the
cases where the banks enter into an agreement with a
consumer for home loans, the banks have envisaged
penalties provided the consumer pre-pays his loans. 50
50
https://indiankanoon.org
16
 Chapter 10
Exceptions in Anti-Competitive Agreements
(Mr. Devanand Pandey & Mr. Narendra Yadav)51
Introduction
The competition act provides for avoiding certain
discrepancies and irregularities which would arise out
of unfair trade practices as a result of free and open
market economy. One such discrepancy can be in the
form of Anti-Competitive Agreements. As it has been
observed by National Consumer Dispute Redressal
Commission:
Even if any free economy/deregulated economy
exploitation of the borrowers/debtors is prohibited
and is considered to be unfair trade practice. Free
economy would not mean license to exploit the
borrowers/debtors by taking by taking advantages of
their basic needs for their livelihood. This cannot be
permitted in any civilized society-maybe a deregulated
free market economy.52
Exceptions
In the Competition Act 2002, some agreements
specifically find a mention for being exempted from
the purview of being anti competitive in nature even if
they are likely to cause an AAEC to the competition.
This proviso clearly offers a shield to the agreement
which lead to the setting up of joint ventures for the
purpose of achieving the larger interests like
increased efficiency in various manufacturing
processes like production, supply, distribution,
storage, acquisition and control. This is with a view to
51
Students of B.Com., LL.B. (Hons) 6 th Semester
52
Awaz v. RBI and DCM Financial Services Ltd. v. Mukesh Rajput,
2008 Bus L R764 (NCDRC), the National Consumer Dispute
Redressal Commission, while deciding the issue of interest on
credit taken on the basis of credit cards (joint order).
promote the interests of the consumer and for the
ultimate benefit, of maintaining a healthy market
economy at the cost of competition.
Upon similar lines, section 3(4) (i) protects the
intellectual property rights of a person. Indian legal
system has certain legislations mentioned under sub
clauses (a) to (f) of section 3 (4) (i), which provided
for intellectual property rights. If an agreement is
entered into by a person to protect his intellectual
property rights protected by the provisions of above
mentioned legislations, then the competition act, 2002
exempts the agreement to be covered under the
purview of section 3(1) as being void for the reason of
being anti competitive in nature. Such agreements
maybe entered into, for the protection of trademark
and copyright infringement.
Also, section 3(4) (i) provides for agreement which
are entered for export related purpose to be kept out
of the purview of section 3(1) and 3(2) for being
adjudged as anti competitive. Indias economic policy
promotes export. Hence, in the best interests of
export and to promote active involvement of India
entities in overseas market, the bar of anticompetitive
nature is removing from the agreements which are
related to production, supply, distribution and control
of goods which are to be exported.
Exception for the Protection of Certain IPRs
Section 3(5) (i) provides, exception from the
application of section 3, to the right of any person to
restrain any infringement of, or to impose reasonable
conditions, as may be necessary for protecting any of
his rights which have been or may be conferred upon
him under
a) The Copyright Act, 1957 (14 0f 1957)
b) The Patent Act, 1970 (39 0f 1970)
c) The Trade and Merchandise Marks Act, 1958
(43 of 1958) or the Trademarks Act, 1999(47
of 1999)
17
 d) The Geographical Indications of Goods
(Registration and Protection) Act, 1999 (48
of 1999)
e) The Designs Act, 2000 (16 of 2000)
f) The Semiconductor Integrated Circuit Layout
Design Act, 2000 (37 of 2000)
Hence like Competition Laws in other countries the act
recognizes the value of IPRs an incentive to creativity
and economic growth. However, the exemption in
section 3(5) restriction must be reasonable and
necessary to protect IPR.
Exclusion of Intellectual Property in Competition
Act, 2002
The Competition Law provides legitimate exception to
Intellectual Property Rights in order to balance
monopolistic right with fair market principle. It is
provided under Competition Act, 2002 that the role of
Competition Commission of India as a regulator is to
ensure equated division of economic justice among
participants in relevant market system. Contrastingly
however, it is noticed that Intellectual Property Rights
provides a position of monopoly to the enterprises
who have acquired Intellectual Property Rights in
various disciplines. In such a situation following
guiding principles holds importance and validity:
As per essentials Supply Doctrine, the
foreclosure of market is prevented by
ensuring supply of basic necessities to new
participants in market system. It is also the
objective of the regulator to ensure that the
fair market system allows opportunities to
new entrants in competition to stand
separate and independent from the
enterprises holding majority Intellectual
Property Rights.
In a situation where broader objective of
Competition Law are difficult to achieve
because of existing monopoly in the name of
Intellectual Property holder, compulsory
licensing in accordance with TRIPs
Agreement and domestic Intellectual
Property Laws are greater relief for both
consumers and enterprises.
To balance the economic rights of various
participants in a market system, the
relevancy of which is decided by the
commission, orders of Competition
Commission of India have tendency of
significantly controlling many factors like
entry barriers, supplies, behavior, practices,
methods, objectives and to level competition.
Exceptions to Agreements Related to Export
Many countries exempt anti-competitive agreements
relating to exports from the operation of law, this is
presumably on the grounds that such anti competitive
agreements harm only overseas consumers and are
therefore of no concern to the national authorities.
Section 3(5)(ii) exempts the rights of any person to
exports goods from india upto the extent to which the
agreement relates exclusively to the production,
supply, distribution or control of goods or provision of
services for such exports. It means exports
agreement relating only to the production, supply,
distribution or control of good or provision of services
is exempted. According to Meyerman, in the course of
reaching agreement on export prices or terms of sale,
for example the participants may exchange
information about domestic prices or output that
would permit them to reach an explicit or tacit
agreement affecting domestic market.
Exemption For Joint Ventures
Proviso attach to this section 3(3) exempts any
agreements entered into by way of Joint Ventures if
such agreements increases efficiency in production,
supply, distribution, storage, acquisition or control of
goods or provisions of services. The term Joint
Venture has not been defined in the act. In general
terms it means the cooperation of two or more
individuals or businesses in which each agrees to
18
share profit, loss and control in a specific enterprise.
A Joint Venture can also be defined as an association
of firms or individuals form to undertake a specific
business project. It is similar to a partnership, but
limited to a specific project (such as producing a
specific product or doing research in a specific
area).53
Judgments and orders of CCI related to anti
competitive practices in India:
Since the time when the CCI was brought into
functioning by a notification as to that effect, it has
been actively functioning as the competition watchdog
of India. It has passed various orders with respect to
the violation of competition under section 27 of the
competition Act, 2002. The anti competitive
agreements under section 3 of the competition act are
under the security of CCI. The validity of such
agreement is upheld or denied, upon the judicial
scrutiny of the facts of each case by the CCI.
FICCI Multiplex association of India v United
Producers/Distributors Forum and Ors
Brief Facts:
In the present case, the competition commission of
India imposed a penalty of 1 lakh rupees upon each of
the opposite parties VIZ: United
producers/distributors form, the association of
motion pictures and t .v. producers, and the film and
television producers gild of India ltd. For engaging into
cartelization upon the information of the complainant-
FICCI Multiplex owners Association .The information
alleged that the parties were enjoying a 100%
monopolistic market position for production and
distribution of hindi films in the multiplexes in India.
For the purpose of violation of the provisions of
competition act 2002, India was to be considered as
the relevant market. If was alleged briefly that the
concerted action of the said parties resulted in
53
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2017)
arbitrary price fixation, against the interests of the
multiplex owners. It was further alleged that UPDP and
its members have collectively boycotted the multiplex
cinema operators in violation of section 3(3)(c) of the
Act.
Decision:
In the view of the commission, none of the opposite
parties, in their replies, could justify their conduct and
successfully rebut the presumption imposed upon
them by the prima facie case of the informant and the
detail inquiry report of the Director General. Hence
the penalty was levied, and the association was
ordered to be withheld for being engaged in anti-
competitive practices.
Neeraj Malhotra v. Deustche Post Bank Finance
Ltd. & Ors.54
It is one of the leading decisions by the Competition
Commission of India, also known as Prepayment Loan
Case wherein the commission was called upon to
examine the issues of anti-competitive agreements
and abuse of dominance by banks while charging
prepayment penalty on home loans. The informant Mr.
Neeraj Malhotra was an advocate who sought to bring
several banks providing home loan facility and
charging a compulsory prepayment penalty for prior
exit by a customer. It was alleged by the informant
that this was the practice adopted by all the private
and public sector banks, thus leading to abuse of their
dominant position in the market. Also it prevented
other market players to enter into the market and
charge comparatively low rates of interest. The
informant further alleged that the acts carried on and
the decisions taken by the banks were violative of
provisions of the section 3(1), 3(3)(a) and 3(3)(b) read
with section 4(1), 4(2)(a)(i) of the act. The banks are
also abusing their dominant position in the relevant
market by imposing unfair and discriminatory
conditions on the purchase of services thereby
54
Case No. 5/2009, Date of Decision: 2.12.2012
19
preventing their borrowers from switching over to
other banks / HFCs offering similar services at
cheaper rates which are anti-competitive practice.
The commission ordered an enquiry.
Majority Opinion
It was opined by the majority that although IBA was an
association but there was no such unanimous decision
regarding an arrangement or agreement leading to
charging of prepayment penalties by the association.
Thus the act of the banks could not be considered as
being a result of an anti-competitive agreement. Also
it was observed that an arrangement between bank
and the customer could not be termed as an anti-
competitive agreement. It was observed: it is
apparent from a plain reading of the contents
reproduced above that the meeting of the IBA was
actually to discuss the growing practices of the
corporate borrowers who would avail of committed
lines of credit by banks for working capital but would
first look at other market options such as CPs, bonds
etc. for funding and use lines of credit only as a
fallback. This put adverse pressure on asset-liability
management by banks. It was only in the context of
those discussions that some banks raised the issue of
prepayment on housing loans also. The discussion the
subject was consequential and not initial. Even then, it
merely resulted in a clear decision that it should be
left to the banks to decide. The lack of imperative voice
and intent is evident from the language and content of
the said circular of IBA. It would be patently unjust to
use it as an evidence of either action in concert or
process of combined decision making by the banks.
This rule out any element of contravention of sub
section (1) of section 3.
Dissenting Opinion
As per the dissenting view, two member were of the
view that the arrangement between the banks and the
customers was violative of section 19(3) (a) (c) and
(d), it was observed that the main objective of the
Competition Law is to ensure that these interests are
secured and safeguarded. Thus, while broadly
construing the mater, the minority opinion was in the
favour of the customers. The term agreement should
be construed broadly by the minority and not strictly
as per the statutory definitions. The minority framed
its opinion in the followings words:
it transpires that member of IBA felt a need for
common approach in fixing prepayment charges on
loans and the issue was discussed and deliberated in
the IBA meetings on 28.08.2003 which culminated in
the circular dated 10.09.2003 issued by IBA to all chief
executives of its member banks. It was noted therein
that pre-payment charges in the range of 0.5% to 1%
would be reasonable. However, decision in this regard
was left to the individual discretion of the banks.. it
may be noticed that the definition is inclusive and not
exhaustive. Further, the same has been worded in a
wide manner and the agreement does not necessarily
have to be in the form of formal document executed by
the parties. Thus, there is no need for an explicit
agreement and the existence of the agreement can be
inferred from the intention and objectives of the
parties. In the cases of the conspiracy the proof of
formal agreement may not be available and may be
established by circumstantial evidence only. The
concurrence of parties and the consensus amongst
them ca, therefore, be gathered from their common
motive and concerted conduct.
The court in the case of Competition Commission of
India v. Steel Authority of India Lyt. & Anr. 55
Observed that:
The principle object of the Act, in terms of its
Preamble and Statement of Objects and Reasons, are
to eliminate practices having adverse effects on the
competition, to promote and sustain competition in the
market, to protect the interest of the consumers and
ensure freedom of trade carried on by the
participants in the market, in the view of the economic
development of the country. In other words, the Act
55
(2010) 10SCC 744
20
requires not only protection of trade but also
protection of consumer interest. Primarily, there are
three main elements which are intended to be
controlled by implementation of the provisions of the
Act, which have been specifically dealt with under
section 3, 4 and 6 read with sections 19 and 26 to 29
of the Act. They are anti-competitive agreements,
abuse of dominant position and regulation of
combinations which are likely to have an appreciable
adverse effect on competition.

21
 Chapter 11
International Cartels & Adverse Effect on
Competition in India
(Mr. Shivendra Kushwaha & Mr. Sudhanshu Shukla)56
Introduction
The object of the competition policy, which is adapted
in India, is to create a business environment where the
firm can compete with each other and there should be
always enough opportunities for the new firm to join
the competition with the existing firms. Such kind of
policy always promotes efficiency, means it gives an
opportunity to the firms to increase their efficiency to
do better business and earn better profit and also
maximize the welfare of the people of the society
because in such type of market position the people
have enough choice in their hand in buying goods or
services.
The main problem of a competition friendly market is
some activities of the existing firms of the market.
Very often these firms started to collude to their
competitor or forcing the competitors to go out of the
market or buying out the competitors. We can find all
these activities of the firms in our Competition Act
2002. Section 3, 4 and 5 of this Act says about the anti
competitive agreement, abuse of dominance and
combination and merger respectively.
Historical Background
Before the present Competition Act 2002, The
Monopolistic Trade Practice Act 1969 was there. The
MRTP Act 1696 was enacted in pursuant of a report
submitted by Monopolies Inquiry Commission", which
was setup by the Govt. of India to review the economic
condition of India with regard to the concentration of
56
Students of B.Com., LL.B. (Hons) 6 th Semester
the economic power to some private entities and also
to examine the affect of the monopolistic and
restrictive trade practice in India. With the changing of
time it is felt that some change should be to the MRTP
Act, because many new concepts, like globalization,
liberalization etc, are coming, for which India has to
change its business policy within and also outside of
its jurisdiction. So the Competition Act 2002 had come
into force. This new law is mainly came into force by
the recommendation of the Raghaban Committee
report, a committee set up by the Govt. of India,
headed by S.V.S Raghaban.
A committee, called Competition Committee of India
(CCI) is also constituted under the present
Competition Act 2002. The main functions of this
committee are as follows:
To eliminate practices having appreciable
adverse effect on the competition.
To encourage and sustain competition.
Preserve consumer welfare.
Maintain freedom of trade carried on by the
other traders in Indian market.
What Is Cartel Under Indian Competition Law?
Section 3 of the Competition Act, because it deals with
the anti competitive agreement and cartel is a special
kind of the anti competitive agreement. The word anti
competitive agreement" means an agreement entered
by two or more firms of the market to prevent either
directly or indirectly other firms from entering into
the market or even try to exclude them. The effect of
such kind of agreement is always to curve out the
competition from the market. There are two
categories of the anti competitive agreement,
horizontal and vertical.
Horizontal agreement: It is an agreement entered
between competitors operating at the same level of
the production process i.e, enterprises engaged
broadly in the same type of activity, for example
agreement between producers or sellers or retailers
22
dealing with same kind of goods. In this kind of anti
competition agreement, there shall be a presumption
of Appreciable Adverse Effect on Competition (AAEC).
Means it shall presume that whenever there is such
type of agreement, there will always be an adverse
effect on the competition. The burden of disproving is
upon the defendant. These types of agreements
include the followings:
Agreement regarding price fixation.
Agreement relating to market allocation.
Agreement relating to bid rigging.
Agreement relating to limiting or controlling
the product and supply market, technical
developments, investments etc.
Vertical agreement: It is an agreement between non-
competing undertakings operating at different level of
manufacturing and distribution process, for example,
agreement between producers and whole sellers or
between producers, wholesalers and retailers. Here
the irrefutable presumption of the AAEC cannot be
taken to be account; the rule of reason" comes into
play for determining the nature of the agreement of
this kind. Means you have to apply your reason to
determine the adverse effect of such agreement upon
competition, it is also true that for vertical
agreements, the test differ in case to case.
Examples of Cartels in India
SODA ASH CARTEL: Alkali Manufacturers Association of
India v. American Natural Soda Ash Corporation is
very important. This cartel was related to soda ash.
Before formation of this cartel, there were 6
producers of soda ash, they were acting
independently, after formation of this cartel they
started to produce soda ash and supply them
throughout the world in a very cheap rate. For this
reason the local producers of different nations started
to face difficulties to survive in the competition. In
Indian also the same problem occurred. The
Government of India charged a very high rate of anti
dumping duty upon this cartel.
CEMENT CARTEL: Now a day, a great boost is going on
in the real estate industry in India. In this event, a
great cartel was formed in the cement industry, as
cement is the most needed component of the real
estate business. In the year of 2000-2001 near about
cement industry of India like, Grasim, lafarze, birla and
many more entered into a cartel resulting price
control in Indian market. A complaint was filed to the
Competition Committee regarding this. According to
this complaint mainly in the city of Jabbalpur, the
price of the cement increased significantly. The
complaint also alleged about a concerted practice
among the cement giants regarding the price fixation
and it also gave detail of a minute report of a meeting
where this concerted practice was carried on. The
MRTPC ordered the 9 cement giants and the CMA to
refrain from such activity like price fixing.
CARTEL IN ROAD TRANSPORT: Road transport is
considered as lifeline of the economic growth of any
country, so India is not the exception to this. We can
take example of Germanys Autobhan, which makes a
revolutionary change in the economic position of this
country by connecting the major cities with the
remote villages. At the beginning the road was
considered as public matter and exclusively made by
the Government, but with the changing of the time it is
not possible for the Govt. to take all the
responsibilities regarding the road transport, there is
also a factor of investment. Particularly for the
maintenance and for investing more fund with the
increasing demand private and foreign investors come
into the picture. Competition starts between them.
There is no doubt that this road transport sector of
India is huge and also very profitable, so the investors
starts to inter into anti competitive agreements and
also bid rigging, which are totally prohibited under the
Competition Act 2002. There are also instances of
entry barriers, resulting territorial allocation of
contracts, which are also prohibited under the Act.
Illegal competition is also going on with the raw
materials needed for the road construction, like steel,
roads, cement etc. Proper road transportation system
23
is required for better implementation of the socio-
economic policies of the country. It also affects the
price of the goods. So, the CCI should make
appropriate provisions to give a check and balance
method to control the anti competitive activities in
road transportation system.
RAILWAY CARTEL: In the very recent time it comes into
picture that in Indian Railway a cartel is going on
regarding the seats of the compartments. Previously
foam was used to make these seats. Suddenly the
RDSO, which is the research and development wing of
Railway shifted to a new material called recron for
making seats. It comes to know from an investigation
that the recron seats take Rs. 50000 for one
compartment, whereas the foam made seats charged
Rs 18000 per compartment, the investigation further
says that this recron is not suitable for the Indian
weather also. The whole supply of the recron is given
to two suppliers, without calling a tender for that and
these two suppliers charged near about 200% more
than the market rate of the recron seats. So, there is
no doubt that these two vendors of recron act as
cartel and the RDSO would never make any doubt
regarding this.
TRUCKING CARTEL: Trucks are considered as the
lifeline for the transportation of goods in India. In a
country like India, transportation of goods plays a vital
role in determining the price of goods. In this sector
also we can find a huge cartel, which was consisted by
some of the truck operators. They fixed the fare of the
truck transportation and restrained the other truck
operators to compete with each other regarding the
price fixation. As a result of this there was an
abnormal increase in the transportation cost, which
leads to increase the price of the respective goods,
causing detriment to the consumers. The MRTP
Commission gave a cease and desist order to some of
the truck operator union but as there was no
provisions regarding penalties, so there were no
penalties for these operators.
Harms Caused By the Cartels to the Consumers
It is a worldwide accepted notion that cartels have
negative effects to the consumers. If we take example
of any of the international or national cartels, we can
find that the effect of such cartels is an extraordinary
price high of the respected goods or services. There
are at least 30% to 40% price high occurs due to
formation of any cartel. The people have to pay that
high amount to avail that respected good or service,
though actually that goods cost more less than what
the consumers have to pay. So, it is considered as a
great detriment to the consumer welfare.
Busting a Cartel
If we go through the provisions of the Indian
Competition Law, we can find that there are many
provisions relating to cartel detection. The related
sections are as follows:
Section 19 which says about the grounds of enquiry in
certain agreements.
Section 26 which says about the procedure
of the inquiry.
Section 27 says about the orders which may
be passed by the Commission.
Section 32 says about the extra territorial
jurisdiction of the Act.
Section 33 deals with the power to issue
interim order.
Section 36 gives a clear idea about the
power of the commission to regulate its own
procedure.
For the rectification of orders you can go through
section 38.
Section 39 says about the execution of order of the
commission imposing money penalty.
Section 46 is one of the most important sections
regarding cartel detection. It says about the lesser
penalty process of the commission. It should be read
24
with the regulation which gives minute detail of this
system.
Section 48 says about the liability of the company and
its members regarding contravening of any of the
provisions of the Act.
Among all these suggestions some are already
included in the Competition Act 2002 in India and the
rest should be included to get a better result for
detecting cartel, as cartels are the main impediment
in the way to perfect competition.

Conclusion and Suggestion

For detecting a cartel, the competition authority

should have some extraordinary power, such as:

Most of the cartels are formed in secrecy, so the

competition authority should posses some special
features to detect a cartel, means, they have had
something more than what a general investigation
agency have.

More units of Competition Authority should be formed,

with a special wing for cartel detection.

More importance should be given to the leniency

programme" and also to the whistle blowing system.

Huge penalty should be imposed, with criminalization

of the persons involved in a cartel.

Focus should be given to the presence of any

arrangement in the market, and not upon the
consequences of such arrangement to the economy.

The Director General of the present Competition

Committee has given a very wide power, which
includes all the power of a Civil Court and also all
power of inspector" under section 240 and 240A of
the Company Act.

The Director General now has a wide power regarding

search and seizure; he can make a search even
without prior notification to the person against whom
the allegation has made.

As most of the evidences of such type of cartels are

kept in computers, so in the investigation committee,
the persons should have good knowledge of.

25
 CONTENTS

12. Relevant Product & Geographical Market under

Competition Act, 2002

13. Assessment of Dominance in the Relevant Market

Part III 14. Exclusionary Practices for Abuse of Dominance

Abuse of Dominance 15. Exploitative Practices for Abuse of Dominance

16. Presumptive Abuse of Dominance under

Competition Act, 2002
17. Standards of Investigation in Abuse of Dominance
under Competition Act, 2002

26
 Chapter 12
Relevant Product & Geographical Market
under Competition Act, 2002
(Mr. Hem Singh Yadav, Mr. Dharmendra Pathak, Mr. Akash
Singh, Mr. Deyvanshu M Nigam & Mr. Purusharth Prem)57
Introduction
The object of the Competition Act, 2002 (Act for
short) is to preserve and promote competition and to
prevent anti competitive business practices with
minimal Government intervention. The Competition
Act provides for the prevention of anti competitive
agreements, abuse of dominant position and
combinations. While inquiring the cases in respect of
these matters the Competition Commission mainly
consider the relevant market for this purpose.
The term relevant market is defined under Section
2(r) of the Act as the market, which may be determined
by the Commission with reference to relevant product
market and relevant geographic market or with
reference to both the markets.
The term relevant geographic market is defined
under Section 2(s) of the Act as a market comprising
the 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 conditions prevailing in
neighboring areas.
The term relevant product market is defined
under Section 2(t) of the Act as a market comprising of
all those products or services which are regarded as
interchangeable or substitutable by the consumer, by
reasons of characteristics of products or services,
their prices and intended use.
57
Students of B.Com., LL.B. (Hons) 6 th Semester
Both the markets have relevance in the determination
of the agreements and anti competitive, in evaluating
combinations and dominance of an enterprise or
group. An agreement in the nature of cartel which
limits or controls production, supply, market, technical
development, investments etc, need to be looked as
being anti competitive with reference to relevant
market. Similarly agreement to share the market or
sources of production by way of allocation of
geographical area of market, types of goods or
services or number of customers in the market or by
any similar way and these need to be interpreted in
the context of the definition of relevant geographical
market.
Section 4 of the Act prohibits any enterprise or group
from abusing dominant position, meaning thereby a
position of strength, enjoyed by an enterprise or
group, in the relevant market, in India which enables it
to-
Operate independently of competitive forces
prevailing in the relevant market; or
Affect its competitions or consumers or the
relevant market in its favor.
Combination means acquisition of control, shares,
voting rights or assets, acquisition of control by a
person over an enterprise where such person has
direct or indirect control over another enterprise
engaged in competing businesses and mergers and
amalgamations between or amongst enterprises when
the combining parties exceed the thresholds set in
the Act. The thresholds are specified in the Act in
terms of the assets or turnover in India and outside
India. Entering into a combination which causes or is
likely to cause an appreciable adverse effect of
competition within the relevant market in India is
prohibited and such combinations shall be void.
According to Section 19(3) of the Act provides that the
Competition shall give due regard to all or any of the
following factors, while determining whether an
2
agreement has appreciable adverse effect of
competition:
Creation of barriers to new entrants in the
market;
Driving existing competitors out of the
market;
Foreclosure of competition by hindering
entry into the market;
Accrual of benefits to consumers;
Improvements in production or distribution
of goods or provision of services;
Promotion of technical, scientific and
economic development by means of
production or distribution of goods or
provision of serviced in the relevant market.
The Competition commission, while deciding whether
an enterprise enjoys dominant position or not, shall
have due regard to all or any of the following factors:
Size and resources of the enterprise;
Market share of the enterprise;
Size and importance of the competitors;
Economic power including commercial
advantages over competitors;
Vertical integration or sale or service
network of such enterprises;
Dependence of consumers on the
enterprise;
Entry barriers;
Countervailing buying power;
Market structure and size of the market;
Social obligation and social costs;
Relative advantages;
Any other factor that the Government may
consider relevant for the inquiry.
The Competition Commission, for determining the
relevant geographic market shall have due regard to
all or any of the following factors:
Regulatory trade barriers;
Local specification requirements;
National procurement policies;
Adequate distribution facilities;
Transport costs;
Language;
Consumer preferences;
Need for secure, regular supplies or rapid
after-sales service.
The Commission, while determining relevant product
market shall have due regard to all or any of the
following factors:
Physical characteristics or end use of goods;
Price of goods of service;
Consumer preferences;
Exclusion of in-house production;
Existence of specialized producers;
Classification of industrial products.
The prescription of parameters for determining
appreciable adverse effect on competition of
agreement, dominant position with relevant market
are intended to bring consistency and certainty in
working of the Commission which has to consider all
or any of the applicable factors, as the case may be.
The Competition Commission, while determining the
combination, shall have due regard all or any of the
following factors:
Actual and potential level of competition
through imports in the market;
Extent of barriers to entry into the market;
Level of combination in the market;
Degree of countervailing power in the
market;
Extent of effective competition likely to
sustain in the market;
Extent to which substitutes are available or
are likely to be available in the market;
Market share, in the relevant market, of the
persons ot enterprise in a combination,
individually as a combination;
3
 Nature and extent of vertical integration in
the market;
Possibility of falling of a business;
Likelihood that the combination would result
in removal of a vigorous and effective
competitor or competitors in the market;
Relative advantage;
Whether the benefits of the combination
outweigh the adverse impact of the
combination, if any.

This section is incomplete, STUDENTS should complete

it.

4
 Chapter 13
Assessment of Dominance in Relevant Market
under the Competition Act, 2002
(Mr. Shobhit Tripathi & Mr. Sagar Yadav)58
Introduction
In the MRTP Act the basis of determining the
dominance is whether an undertaking has a share of
one fourth (25%) or more in the production, supply,
distribution or control of goods or services. It means
a position of strength enjoyed by an enterprise in a
relevant market in India.
It enables enterprises:
1. To Act Independently
It allows the enterprise to act independently and to
take decision on their own. Dominance is good for an
enterprise until and unless it starts exploiting the
consumers. Dominance not only allows the enterprise
to act independently but also gives certain privileges
for example earning more profit in the market.
2. Affects its Competitors or Consumers in its
favour
It affects the competitors or consumer to act
according to the dominant enterprise but there are
certain restriction to that affects. If it starts
exploitation of the consumers then that may be
regarded as Anti-Competitive Practices which is
against the spirit of the Competition Act, 2002 and a
certain amount of fine will be imposed.
Relevant Market
Relevant market may be defined as the market which
is relevant. There are two kinds of relevant market:
58
Students of B.Com., LL.B. (Hons) 6 th Semester
1. Relevant Product Market
It means a market comprising all those products or
services which are regarded as interchangeable or
substitutable by the consumer, by reason of
characteristics of the product or services, their
prices and intended use.
2. Relevant Geographic Market
It means a market comprising the area in which the
conditions of competition for supply of goods or
provision of services or demand of goods or services
are distinctly homogeneous and can be distinguish
from the condition prevailing in the neighboring areas.
Factors behind Dominance
There are various factors behind the process of
Dominance. Some of them are discussed below:
1. MRTP Act decides the dominance of an enterprise as
according to section of MRTP Act.
2. Commission may also take into consideration any
factor that may be relevant. It is seen in Google Inc.
Case. In this case it has been observed that Google
Inc. is indulged in the activities which are categorized
as abuse of Dominance.
The common thread in prohibition of "Anti-competitive
Agreements (Section 3 of Act)" as well as "abuse of
dominant position (Section 4)" is that both seek to
maintain/sustain competition in the markets and are
to be enforced "ex post". An enterprise or association
of enterprises is liable under Section 3, only when,
they enter into an agreement relating to production/
supply of goods or rendering of services which causes
or is likely to cause appreciable adverse effect on
competition within in India. On the other hand, abuse of
dominance bears upon unilateral behavior of dominant
enterprise or group thereof. Thus, while the
concurrence of wills of two or more independent
entities is a condition precedent to make out a case of
Anti-competitive Agreement, abuse of dominance,
5
being a unilateral conduct, does not emanate from an
agreement, which requires the consent of more than
one party.
CCI has mandated the examination of certain factors
when it comes to Dominance. The factors are listed
below:
(a) Market Share of the Enterprise
After determining the relevant market, the next step in
determining "dominance" is to assess market share of
enterprise or group. Different parameters are
employed to measure market share depending upon
the nature of sector and the issue under investigation.
For example, the market share of an airline could be
measured on the basis of number of flights, number of
aircrafts, number of passenger's carrying capacity,
the city pairs etc. and each parameters may give
different results. In the mining industry, the market
share can be based on reserves held by different
operators.
In case, the products are heterogeneous, it is
advisable to calculate market share in terms of value
expressed in turnover and in case products are
homogenous, the production capacities and reserves
are believed to be better indicators of market share.
Primarily, the CCI is required to look at current
market share as provisions are applicable only to pre-
existing dominance. However, historic data may be
relevant in markets which are characterized by
relatively infrequent large lumpy Orders. In house
production is normally not included in the calculation
of market share. The competition literature also
suggest that if market share has fluctuated
significantly over time, this is indicative of effective
competition and erosion of market share over time, is
indicative of absence, of dominance and in case the
market leader has been able to maintain or increase
its market share, it demonstrates dominant position.
In India, between 1994 to 2005, in respect of 41
products, the composition of first five players
remained the same and in respect of 12 products
namely drugs/ pharmaceuticals, television, medical
equipment, infant milk food, iodised salt,
cigarettes, commercial vehicle, gaskets and
carburetors, the leaders not only maintained their
position but also increased their market shares. A high
market share also indicates limited ability of customer
to shift to other undertakings.
(b) Size and Resources of the Enterprise
Large size and superior financial position or
resources may be a contributing factor to a dominant
market position. In the case of United Brands Co v.
Commission, a market share of 40-45 per cent was
viewed to be dominant and other factors were
considered to be significant.
In India, the cash rich BCCI with virtual strangle-hold
over cricket has not accorded recognition to the ICL
as a league, and has denied access to cricket grounds
and prevented ICL players and coaches from
participating in BCCI sponsored activities. The financial
clout and other resources at the command of BCCI
enabled it to promote its own sponsored IPL by
excluding the ICL formed by Essel Group in May, 2007.
The presence of two cricket leagues namely the IPL
and ICL would have led to increased competition to the
benefit of cricket fans, cricketers and market as a
whole.
(c) Size and Importance of Competitors
When looking at market share it is also relevant to
look at the largest firm's market share relative to its
competitors; the smaller the shares of the
competitors, it would be advisable to hold that the
largest firm as dominant. Market share of one
competitor in the market also determine the
competition constraint on the another player. For
example, both Pepsi and Coke enjoy over 40 per cent
market share in soft drink market in India and again in
the truck chassis market, there are only two players
namely Ashok Leyland and Telco and both have almost
6
equal market shares. This reflects that one has ability
to exercise competitive pressure on another and
therefore, neither of them ought to be determined as
"dominant in the relevant market".
(d) Economic Power of the Enterprise
Including Commercial Advantage over Competitors
Superior market position or resources may be a
contributing factor to a dominant market position. The
ECJ in United Brands v. Commission 59 considered
economies of scale and scope as a significant power
leading to dominance. In India, Life Insurance
Corporation of India is having the benefit of prior
entry and that of sovereign guarantee in the personal
insurance market and thereby
has commercial advantage over new entrants. Access
to capital which incumbent has to the exclusion of
others may be regarded as relevant for the purpose.
In Continental Can Co. Inc. case, the Commission
regarded access to international capital market as
significant factor in determining dominance.
(e) Vertical Integration of the Enterprises or Sales
or Service Network of Such Enterprises
The vertical integration and the benefit of well-
established distribution system may act as barrier to
entry as it can discourage or impede access for a
potential entrant to the market. The ECJ noted that
Roche's highly developed.
Study Of Dominance Through DLF Case
CCI found that the DLF Abused of Dominance position
by unfair contract terms.
1. The Competition Act ensure that there should be fair
play, prohibition or exploitation, striking out
exclusionary behaviour and to provide for balance
economic market system where the participants as
well as consumer should not receive adverse effect of
dominance of enterprise.
59
[1976] EUECJ C-27/76R
2. The competition act, 2002 is design keeping the
indicative factor in minds and the list of such factor is
not exhaustive. The Act provides some factors which
are primarily indicative of the AOD by an enterprise in
a given relevant market but does not restrict the
other factor that may cause appreciable adverse
effect on competition.
3. In DLF dispute, it was discovered that the dominant
position was abused by using unfair terms in a
contract which significantly cause adverse effect of
consumer.
4. It is therefore clear the factors listed under section
2(1)(a) of competition act 2002 read with section 28 &
29 do not provided the list of factor which can be the
basis of abuse of dominance only.
Predatory Pricing or in differentiate Pricing.
It means that actual price indicated is not proportional
to expenditure actually incurred.
1. Most of enterprise in market system adopts method
of growth with a single object of scale of business that
may include concerns and rewarders. There is
however a thin line of differentiation between such
methods being promotive and prohibitive in market
system to understand fairly the differentiation of
method which is adopted by dominant enter, the study
of behavior is divided in various phrase to understand
effect of such method on the market system.
2. In a given equation of time, the study is aimed that
analyzing different formats of commercial activity
which has a significant effect on relevant market.
Collective study of growth and in balancing of records
of other participants in the market describes variation
in activity. Such variation should be clearly distinctive
of the fact that such behavior is in proportion to the
method adopted by dominant enterprises.
3. To conclude Abuse of Dominance, indicative list
provided under section-4(2) (a) is a guiding source but
it is not exhausting in nature. Under Competition Act
7
2002 the commission has all rights and power to take assimilation of losses. It is clear that any method
into consideration any other factor which is not listed which is adopted with in intention of concentrating
under the provision of act. either in-

4. For a complete analysis of Abuse of Dominance (a) Market Presences.

following things needed;-
(b) Consumer Choice.
Relationship of growth with adjustment of
(c) Survival in relevant market will indicate Abuse of
price.
Dominance position in high probabilities.
Commercial expansion of outrage.
Mergers and acquisition. Suggestions & Conclusions
Consumer dispute index.
Compliance formalities.
Regulatory supervision.
Influence of international market.
Any other factor having legitimate
connection with business.

5. As evident in DLF case, instrument of competitive

behavior keep changing with situation of the market. It
was also observed in this case that an enterprise may
effectively abuse its position of dominance because of
linear factor of dependency. However it does not mean
that presence of a single enterprise in a given
relevant market is indicative of the absolute
dominance of such an enterprise. It is therefore clear
that dominance and its abuse are result of a study
which consist of composite analysis of participants
behavior in selected period of time and its contrast to
behavior of the dominance enter.

6. It is also evident from MCX case that an unfair

method business may lead to unexpected distortion in
market system resulting into adverse effect on
competition. It is important to understand and
highlight the patterns business methods and broader
commercial objective desired to be achieved by the
use of such method in such an analysis, the result will
show effect of methods to conclude abuse of
dominance. For ex- MSE Ltd use the predictive price to
measure of concentrating consumer attention which
led to initiation of negative concerns for new entrants
like MCX Ltd. It may be observed that a fair business is
always proportional to the graph of production and

8
 Chapter 14
Exploitative Practices for Abuse of
Dominance
(Ms. Saumya Prajapati & Mr. Saurabh Tiwari)60
Introduction
The Act defines dominant position (dominance) in
terms of a position of strength enjoyed by an
enterprise, in the relevant market in India, which
enables it to:
Operate independently of the competitive
forces prevailing in the relevant market; or
Affect its competitors or consumers or the
relevant market in its favour.
It is the ability of the enterprise to behave/act
independently of the market forces that determines its
dominant position. In a perfectly competitive market
no enterprise has control over the market, especially
in the determination of price of the product. However,
perfect market conditions are more of an economic
ideal than reality. Keeping this in view, the Act
specifies a number of factors that should be taken into
account while determining whether an enterprise is
dominant or not.
Dominance is not considered bad per se but its abuse
is. Abuse is stated to occur when an enterprise or a
group of enterprises uses its dominant position in the
relevant market in an exclusionary or/ and an
exploitative manner.
60
Students of B.Com., LL.B. (Hons) 6 th Semester
Factors to Determine Dominant Position
Dominance has been traditionally defined in terms of
market share of the enterprise or group of
enterprises concerned. However, a number of other
factors play a role in determining the influence of an
enterprise or a group of enterprises in the market.
These include:
market share,
the size and resources of the enterprise;
size and importance of competitors;
economic power of the enterprise;
vertical integration;
dependence of consumers on the enterprise;
extent of entry and exit barriers in the
market; countervailing buying power;
market structure and size of the market;
source of dominant position viz. whether
obtained due to statute etc.;
Social costs and obligations and contribution
of enterprise enjoying dominant position to
economic development.
The Commission is also authorized to take into account
any other factor which it may consider relevant for
the determination of dominance.61
Role of CCI in Assessment of Dominance
The question is that whether the Competition
Commission has the power to set or fix prices, and not
just comment on its unfairness? To answer this, one
must interpret Sections 27 and 28 of the Competition
Act which spell out the powers of the Commission to
deal with abuse of dominant position. Specifically,
Section 27(d) empowers the Commission to direct that
agreements which are in contravention of Section 4
shall stand modified to the extent and in the manner
as may be specified in the order by the Commission.
Section 27(g) is even broader since it permits the
Commission to pass such orders or issue such
61
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ument/AOD.pdf
9
directions it may deem fit. Similarly, Section 28(2)(a)
empowers the Commission to vest property rights,
which implicitly includes creation of interest in favor
of third parties by way of a license. The combined
interpretation of these provisions makes it abundantly
clear that the Commission has the necessary power to
fix prices in a given case if the case so warrants.62
While determining dominance, the CCI is required to
consider the factors listed under section 19(4) of the
Act. Consequently, an enterprises dominance is a
multifaceted assessment and there is no bright line
market share test. Reaffirming this view, in Mr
Ramakant Kini v Dr L H Hiranandani Hospital, Powai,
Mumbai, 63 while assessing the dominance of the
Hiranandani hospital in the relevant market for
provision of maternity services by super speciality
and high-end hospitals within a distance of 12
kilometres from the Hiranandani Hospital, the CCI
clarified that the market share of an entity is only one
of the factors that decides whether an enterprise is
dominant or not, but that factor alone cannot be
decisive proof of dominance. Same was the case in Re
M/s ESYS Information Technologies Pvt Ltd and Intel
Corporation (Intel Inc) & Ors, in addition to the market
shares of Intel, the CCIs assessment of Intels
dominance was based on other relevant factors, such
as consumer preference owing to the brand name, the
existence of strong entry barriers in the relevant
market, the significant intellectual property rights of
Intel and the scale and scope enjoyed by Intel.64
Exploitative practices: Abuse of dominance
Exploitative abuse can be said as the excessive pricing
is that it leads to lower prices and thereby increases
consumer surplus. It is argued that such price
reductions benefit consumers directly and in the
short-run. Given that consumers are at the heart of
62
http://blog.mylaw.net/dealing-with-exploitative-abuse-does-
the-competition-commission-have-the-power-to-fix-prices/
63
Case No. 39 of 2012.
64
Case No. 48 of 2011.
competition policy, interventions in cases of excessive
pricing are therefore on this view an integral element
of antitrust enforcement. The CCI therefore keeps a
check on such exploitative behavior o the enterprises
as:
The competition act ensures that there
should be fair play, prohibition on
exploitation, striking out exclusionary
behavior and balance in the relevant market
where the participants and consumers
should not receive adverse effect of
dominance of an enterprise.
Competition law is designed keeping the
indicative factors to mind and the list of
such factors is not exhaustive. The act
provides some factors which are primarily
indicative of the abuse of dominance by an
enterprise in a given relevant market but
does not restrict the other factors that may
cause appreciable adverse effect on
competition in relevant market of India.
In the DLF dispute it was discovered that the
dominant position was abused by using
unfair terms in a contract which
significantly cause adverse effect on
consumers.
It is therefore clear that the factors listed under
section 4(2) r/w section 27 & 28 do not provide the
list of factors which can be the basis of abuse of
dominance only.
10
 Chapter 15
Exclusionary Practices for Abuse of
Dominance
(Mr. Gaurav Shukla & Mr. Sanjeev Verma)65
Introduction
The mere fact of dominance is inconsequential in so
far as attracting the Act is concerned. What has to be
shown is the abuse of the said dominance. An
enterprise or a group is said to be abusing its
dominant position if its activities, on perusal, are
found to be fit any of the activities listed under S. 4(2).
Exploitative activities, meanwhile, are those where the
dominant entity exploits its dominance by imposing
discriminatory and/or unjust conditions on other
firms or consumers. A case in point would be Pankaj
Agarwal, where, in a case pertaining to allotment of
apartments, the contracts drafted unilaterally by DLF
enabled them to be arbitrary about allotment of
super-area, secretative about information relevant to
the purchaser, like, the number of apartments on a
floor, and to cancel allotments and forfeit booking
amounts. The Commission held the contracts to be
exploitative against buyers, and thus, abusive66.
Dominance
The Act prohibits any conduct which amounts to the
abuse of a dominant position which may have, as its
object or effect, an appreciable adverse effect on
competition in any market in India. The Act defines
dominant position as a position of strength, enjoyed
by an enterprise, in the relevant market in India, which
enables it to:
65
Students of B.Com., LL.B. (Hons) 6 th Semester
66
http://cis-india.org/a2k/blogs/abuse-of-dominant-position-
in-indian-competition-law-a-brief-guide
(i) Operate independently of competitive forces
prevailing in the relevant market; or
(ii) Affect its competitors or consumers or the
relevant market in its favour.
Exactly what will constitute as a conduct amounting to
an abuse of dominant position has not been defined.
However, the Act does prescribe certain forms of
conduct as being likely to fall within this general
prohibition. These are:
(i) Engaging in predatory pricing or any other form of
predatory behaviour;
(ii) Limiting production, markets or technical
development to the prejudice of consumers;
(iii) Indulging in practices resulting in denial of market
access;
(iv) Making the conclusion of contracts subject to
acceptance by the other parties of supplementary
obligations which, by their nature or according to
commercial usage, have no connection with the
subject of the contracts; and/or
(v) Leveraging the dominant position in another
market to enter into, or protect the relevant market.
It may be reiterated that merely being a large or a
dominant player in a market, does not amount to an
anti-competitive behaviour. What the Act seeks to
target is to dissuade a dominant player from using his
dominance to adversely affect competition in a
market.
The competition watchdog has recently fined DLF, a
major real estate player in India, for abusing its
dominance in the real estate market (relevant market
of High end Residential Units which are developed
and sold to the prospective buyers). The competition
regulator, in the instant case, found that not only the
market share, size, resources and economic power of
DLF, but also its practices, had given DLF superlative
market power over its competitors. Such market
11
power had assisted DLF in exploitation of consumers
biases, asymmetry of information, costly exit option,
one-sided agreement(s) and unfair conditions being
imposed on the consumers all of which affected the
consumers as well as competition in the market. To
this effect, the competition regulator imposed a
penalty of Rupees six hundred and thirty crores, as
well as directing DLF to cease and desist from
formulating and imposing unfair conditions in its
agreements with buyers, and modifying the unfair
conditions imposed on the buyers67.
Abuse of dominance
Dominance is not considered bad per se but its abuse
is. Abuse is stated to occur when an enterprise or a
group of enterprises uses its dominant position in the
relevant market in an exclusionary or/ and an
exploitative manner.
The Act gives an exhaustive list of practices that shall
constitute abuse of dominant position and, therefore,
are prohibited. Such practices shall constitute abuse
only when adopted by an enterprise enjoying dominant
position in the relevant market in India. Abuse of
dominance is judged in terms of the specified types of
acts committed by a dominant enterprise. Such acts
are prohibited under the law. Any abuse of the type
specified in the Act5 by a dominant firm shall stand
prohibited. Section 4 (2) of the Act specifies the
following practices by a dominant enterprises or
group of enterprises as abuses:
(i) Directly or indirectly imposing unfair or
discriminatory condition in purchase or sale of goods
or service;
(ii) Directly or indirectly imposing unfair or
discriminatory price in purchase or sale (including
predatory price) of goods or service;
67
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%20Laws.pdf
(iii) Limiting or restricting production of goods or
provision of services or market;
(iv) Limiting or restricting technical or scientific
development relating to goods or services to the
prejudice of consumers;
(v) Denying market access in any manner;
(vi) Making 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;
(vii) Using its dominant position in one relevant
market to enter into, or protect, other relevant
market68.
Abusive Conduct
After the dominance has been established the next
question which needs to be answered is whether the
conducts of the alleged enterprise or group can be
considered as abusive? The Act places a special
responsibility on any enterprise which enjoys
dominant position not to conduct its business in a
manner prohibited under the section 4(2).
In a laymans language abusive conducts includes all
the acts of dominant undertaking which are a deviation
from normal practice and result in hindering the
maintenance or development of the level of
competition still existing in the market. It must be
noted that the acts prohibited under the section are
not punishable per se, as the same acts will not
amount to contravention of section 4 if committed by a
firm not dominant in the relevant market. It also
pertinent to point that list of acts under section 4(2) is
exhaustive in nature and no action can be taken if the
conduct of an undertaking does not fall within the
subsection. It is not necessary to show that the abuse
was committed in the market which the undertaking
68
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ument/AOD.pdf
12
dominates. In certain circumstances, prohibition under
section 4 may apply where an undertaking that is
dominant in one market commits an abuse in a
different but closely associated market. This principle
was set out by the European Court in the case of Tetra
Pak II.
The concept of abuse is an objective concept relating
to the behavior of an undertaking in a dominant
position which is such as to influence the structure of
a market where , as a result of the very presence of
the undertaking in question , the degree of competition
is weakened and which , through recourse to methods
different from those which condition normal
competition in products or services on the basis of the
transactions of commercial operators , has the effect
of hindering the maintenance of the degree of
competition still existing in the market or the growth
of that competition.69
Case Law / Illustration
Exploitative Practices
Discriminatory or Unfair Pricing and Conditions of
Sale
The term unfair has not been defined under the Act,
but in common parlance means something which is not
fair and cant be justified. The Act prohibits unfair
pricing and conditions in sale. The European Court of
Justice in the United Brands case held that charging
excessive prices which has no reasonable relation to
the economic value of the product supplied is unfair
pricing.
The Act also provides that when some enterprises or
consumers are given some favourable treatment
without any proper justifications, it is illegal and anti-
competitive. This type of discriminatory behaviour can
be of any form like price, terms of sale, quality,
69
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indian-competition-regime/
quantity, and may in some circumstances extend to
refusal to deal.
Predatory pricing
The traditional theory of predatory pricing is that the
predator, already a dominant firm sets prices so low
for a sufficient period of time that its competitors
leave the market and others are deterred from
entering and the losses incurred due to the low prices,
which like any investment, will be recovered by future
gains. This theory was later supplemented by the
argument that the benefits of predation were not
limited to the market where it predated.
Predatory Pricing has not been mentioned specifically
in the competition laws of most of the jurisdictions
across the world as amounting to an abuse of
dominance. However, under the Act, predatory
pricing of goods or services has been expressly
mentioned as amounting to an abuse of dominance if
engaged in by a dominant enterprise. Distinguishing
predatory behavior from legitimate competition is
difficult. The distinction between low prices which
result from predatory behavior and low prices which
result from legitimate competitive behavior is often
very thin and not easily ascertainable.
The term has been defined under the Act to mean the
sale of goods or provision of services, at a price which
is below the cost, as may be determined by
regulations, of production of the goods or provision of
services, with a view to reduce competition or
eliminate the competitors. So there are two essential
conditions for establishing predatory pricing
Sale of goods or provision of services, at a price
which is below the cost, and
With an intention to reduce competition or eliminate
the competitors.
Now, this definition does not prescribe any specific
type of cost per se but leave it to be determined by
regulations made under the Act. This issue is
addressed by the Competition Commission of India
13
(Determination of Cost of Production) Regulations,
2009. The regulation provided that Cost in the
Explanation to section 4 of the Act shall, generally, be
taken as average variable cost , as a proxy for
marginal cost . Provided that in specific cases, for
reasons to be recorded in writing, the Commission
may, depending on the nature of the industry, market
and technology used, consider any other relevant cost
concept such as . Avoidable cost, long run average
incremental cost, market value.
NSE Case
In this case the Commission acting on a complaint by
the MCX Stock Exchange (hereinafter referred to MCX-
SX), ordered an investigation into the alleged misuse
of dominant position by the National Stock Exchange
(hereinafter referred to as NSE), the countrys largest
bourse. The investigation, carried out by a director
general (DG) of CCI, has found that NSE violated
Section 4(2)( a)( ii), and Section 4(2)( e) read with 4(1)
of the Act.
The MCX-SX had alleged that NSE was indulging in
unfair practices or predatory pricing by waiving the
transaction fee on currency derivatives. The MCX-SX
contended that NSE has waived its transaction fee on
currency derivatives and instead, charges a fee of Rs
2/ Lakh on the turnover in its derivatives segment.
Due to NSEs waiver MCX-SX is also unable to levy such
a fee leading to significant losses and new investors
are not likely to be attracted in the market of currency
derivatives.
NSE, in its reply to the commission, contended that the
intention to eliminate competition is an important
ingredient of predatory pricing, and the fee waiver in
the new currency derivative segment, referred to in
the allegation, is in the nature of introductory pricing
with no intention to eliminate competition.
proved beyond reasonable doubt that NSE has the
design of eliminating competition, the commission said
in its concluding remarks . The NSE had used every
tactics to harm competition by using its dominant
position in the relevant market (stock exchange space)
and has also protected its dominant position in CD
(currency derivatives) segment by using its monopoly
revenues from other segments.
Limiting Production, Technical or Scientific
Development
Under the Act a conduct of an enterprise which results
in limiting production, technical or scientific
development to the prejudice of consumers is
prohibited.
Denial of Market Access
A dominant undertaking with a view to exclude
competition from the market and conducting its
business in a way other than legitimate competition on
the merits is a violation of section 4 of Act. In the case
of United States v. Griffith et al , four affiliated
corporations operating motion picture theatres in
numerous towns and having no competition in some of
these towns used their buying power to obtain
exclusive privileges from the film distributors which
prevented the competitors from obtaining enough first
or second run films to operate successfully.
Subsequently the Supreme Court of the United States
held it unlawful for the operator of a circuit of motion
picture theatres to use his monopoly in towns he has
no competitors to obtain exclusive rights to films for
towns in which he has competitors.

The commission in its decision observed that based

on evidence and after considering the arguments of
both information provider (MCX-SX ) and NSE, it is

14
 Chapter 16
Presumptive Abuse of Dominance in
Competition Act, 2002
(Ms. Prateek Pandey & Mr. Shubham Pal)70
to ensure healthy market competition. So far CCI has
passed several striking orders to remove anti-
competitive practices in India. In this context, it is
noteworthy that the CCI interprets the provisions of
the Act strictly and does not allow abuse of dominance
in any market, irrespective of the fact that the
enterprise may be the only big player or is a non-
profit enterprise.

Meanings & Interpretations

Introduction
While the laws of numerous countries prohibit or
Dominant position as being created when one or more
declare illegal the abuse of dominant
undertakings in a particular market use their position
position/monopoly or attempt to monopolize/ the
in that market to determine economic parameters
misuse of market power or provide for a prohibition of
such as price, supply, the amount of production and
certain conduct by undertakings in a dominant
distribution, by acting independently of their
position/ having a substantial degree of market
competitors and customers. A firm is in a dominant
power, the manner in which dominant position,
position if it has the ability to behave independently of
monopoly or substantial degree of market power is
its competitors, customers, suppliers and, ultimately,
defined is different in different countries. The concept
the final consumer. A dominant firm holding such
of dominance is broader than economic power over
market power would have the ability to set prices
price. It is not the same as economic monopoly,
above the competitive level to sell products of an
although a monopoly would clearly be dominant. The
inferior quality or to reduce its rate of innovation
general definition of dominant position or market
below the level that would exist in a competitive
power followed in jurisdictions such as the European
market. Under EU competition law, it is not illegal to
Commission, United Kingdom, Australia, Germany and
hold a dominant position, since a dominant position
India take into account the ability of a firm or
can be obtained by legitimate means of competition,
enterprise to behave independently of its competitors
for example by inventing and selling a better product.
and the absence of competition or constraint from the
All enterprises in the markets need to adopt fair conduct of competitors.
practices while doing business. A fair competition
The Indian Competition Act contains a definition of
promotes efficiency, encourages innovation, facilitates
dominant position that takes into account whether the
better governance and ensures availability of goods at
concerned enterprise is in such a position of economic
an affordable price. The Competition Act, 2002 ("Act")
strength that it can operate independently of
tries to prevent practices that have an adverse effect
competitive forces or can affect the relevant market
on competition in India. Under section 4 of the Act,
in its favour.
abuse of a dominant position or market power by an
enterprise or a group in the relevant market is one Section 19(2) of the German Act also gives a general
such practice that has an adverse effect on definition and takes into account factors such as
competition. Competition Commission of India ("CCI") predominant position in the market and absence of
is the regulatory body that is tasked with the objective competition completely or no substantial exposure to
competition. The German Act also contains provisions
70
Students of B.Com., LL.B. (Hons) 6 th Semester

15
pertaining to joint dominance of two or more
undertakings.
Abuse of dominant position
Dominant position is a position of strength of an
enterprise in a relevant market. It can be evaluated
based on that enterprise's size, resources and
dependency of consumers.
Section 4 of the Act defines dominant position as "a
position of strength, enjoyed by an enterprise, in the
relevant market, in India, which enables it to-
Operate independently of competitive forces
prevailing in the relevant market; or
Affect its competitors or consumers or the
relevant market in its favor."
Misuse of such a dominant position is referred as
"abuse" by the enterprise in the relevant market.
Abuse of dominant position could be by direct or
indirect means imposing unfair or discriminatory
conditions or prices in sale or purchase of goods or
services and includes practices like predatory
pricing, excessive pricing, denial of market access, and
leveraging.2 As a result, abuse of dominant position
affects the competitors and end users in the market,
and, ultimately the dominant enterprise remains the
sole beneficiary. The dominant position enables an
enterprise to control or affect its competitors,
consumers and the relevant market.
Illustration/ Case Laws
Presumption of Existence of Dominant Position
The competition laws of certain countries, either
under the statute itself or under the regulations
there-under or in case laws provide for a presumption
of the existence of dominant position if an
undertaking/enterprise/firm has a market share at
or above a specified threshold.
The German law, besides a general definition of
dominant position, provides for a presumption of the
existence of a dominant position based on the actual
market share. Section 19 (3) states that, an
undertaking is presumed to be dominant, if it has one
third of market share. A number of undertakings is
presumed to be dominant if it:
1. Consists of three or fewer undertakings reaching a
combined market share of 50 percent, or
2. Consists of five or fewer undertakings reaching a
combined market share of two thirds, unless the
undertakings demonstrate that the conditions of
competition may be expected to maintain substantial
competition between them, or that the number of
undertakings has no paramount market position in
relation to the remaining competitors.
However, it may be noted that the market share tests
are not conclusive, and the presumption of dominance
may be overcome by showing that conditions may be
expected to maintain substantial competition or that
group with collective market share over the threshold
does not in fact have a paramount market position in
relation to removing competitors71.
Under the Indian Competition Act, 2002, there is no
specific provision with regard to the presumption of
dominance where an undertaking has a very large
market share. As the relevant provisions in this
context have not been given effect to yet, the position
on this point is unclear.
The presumption of existence of a dominant position at
certain specified levels of market share has been
provided under the laws of many jurisdictions. The
threshold level specified seems to be the lowest in
case of Germany (one-third I.e. 33.33 per cent),
although the test is not always conclusive and the
71
Under section 4(2) of the Act, predatory price means the sale of
goods or provision of services, at a price which is below the cost,
as may be determined by regulations, of production of the goods
or provision of services, with a view to reduce competition or
eliminate the competitors
16
levels are relatively higher in other jurisdictions, the
highest being in the United States. The Presumption of
dominance at certain levels of market share is
rebuttable in most cases but under the law of South
Africa, market shares in excess of 45 per cent seem
to be a conclusive test of dominance and at these
levels, no other factor seems to be taken into account.

Complete the Write-up

17
 Chapter 17
Standards of Investigation in Abuse of
Dominance
(Ms. Preeti Singh & Mr. Prasoon Kumar)72
Introduction
Dominant position is a position of strength of an
enterprise in a relevant market. It can be evaluated
based on that enterprise's size, resources and
dependency of consumers.
Misuse of such a dominant position is referred as
"abuse" by the enterprise in the relevant market.
Abuse of dominant position could be by direct or
indirect means imposing unfair or discriminatory
conditions or prices in sale or purchase of goods or
services and includes practices like predatory
pricing, excessive pricing, denial of market access, and
leveraging.
As a result, abuse of dominant position affects the
competitors and end users in the market, and,
ultimately the dominant enterprise remains the sole
beneficiary. The dominant position enables an
enterprise to control or affect its competitors,
consumers and the relevant market.
Section 4 of the Act defines dominant position as "a
position of strength, enjoyed by an enterprise, in the
relevant market, in India, which enables it to- (i)
operate independently of competitive forces prevailing
in the relevant market; or (ii) affect its competitors or
consumers or the relevant market in its favor."
CCI has the obligation to control such anti-competitive
practices in India and under Section 19, has powers to
proceed with an inquiry against such enterprises,
whether located in India or outside.
72
Students of B.Com., LL.B. (Hons) 6 th Semester
Procedure of Investigation
The Competition Act, 2002 was enacted to prevent
practices having an adverse effect on competition, to
promote and sustain competition in the markets, to
protect the interests of the consumers and to ensure
the freedom of trade carried on by other participants
in the markets in India. The Competition Commission
was established under the Act India (hereinafter
referred to as CCI which empowers the CCI to
investigate cases/complaints that come before it.
Therefore, for the purpose of assisting the CCI in
conducting enquiries into contraventions of any of the
provisions of the Act, the) Director General
(hereinafter referred to as DG was appointed by the
Central Government.
The role of the DG assumes significance
particularly after the notification of provisions
relating to anti-competitive agreements and abuse of
dominance under the Act, as the CCI is required
to compulsorily refer the matter to the DG to
undertake an investigation, in case the CCI is of the
opinion that there exists prima- facie case of violation
of the provisions of the Act. Thus, a direction of
investigation by the CCI to the DG is deemed to
be the commencement of an enquiry under the Act.
Procedure for Investigation of Combinations
1. Where the Commission is of the opinion that a
combination is likely to cause, or has caused an
appreciable adverse effect on competition within the
relevant market in India, it shall issue a notice to how
cause to the parties to combination calling upon them
to respond within thirty days of the receipt of the
notice, as to why investigation in respect of such
combination should not be conducted.
2. The Commission, if it is prima facie of the opinion
that the combination has, or is likely to have, an
appreciable adverse effect on competition, it shall,
within seven working days from the date of receipt of
the response of the parties to the comb nation, direct
18
the parties to the said combination to publish details
of the combination within ten working days of such
direction, in such manner, as it thinks appropriate, for
bringing the combination to the knowledge or
information of the public and persons affected or likely
to be affected by such combination.
3. The Commission may invite any person or member
of the public, affected or likely to be affected by the
said combination, to file his written objections, if any,
before the Commission within fifteen working days
from the date on which the details of t e combination
were published under sub-section (2).
4. The Commission may, within fifteen working days
from the expiry of the period specified in sub-section
(3), call for such additional or other information as it
may deem fit from the parties to the said combination.
5. The additional or other information called for by the
Commission shall be furnished by the parties referred
to in sub-section (4) within fifteen days from the
expiry of the period specified in sub-section (4).
6. After receipt of all information and within a period
of forty-five working days from the expiry of the
period specified in sub-section (5), the Commission
shall proceed to deal with the case in accordance with
the provisions contained in section 31.
Abuse of Dominant Position
The concept of abuse is an objective concept relating
to the behavior of an undertaking in a dominant
position which is such as to influence the structure of
a market where , as a result of the very presence of
the undertaking in question , the degree of competition
is weakened and which , through recourse to methods
different from those which condition normal
competition in products or services on the basis of the
transactions of commercial operators , has the effect
of hindering the maintenance of the degree of
competition still existing in the market or the growth
of that competition
The philosophy of the Competition Act is that a
situation of monopoly per se is not against public
policy but, rather, the use of the monopoly status such
that it operates to the detriment of potential and
actual competitors. At this point it is worth mentioning
that the Competition Act does not prohibit or restrict
enterprises from coming into dominance. There is no
control whatsoever to prevent enterprises from
coming into or acquiring position of dominance. All
that the Act prohibits is the abuse of that dominant
position. The Act therefore targets the abuse of
dominance and not dominance per se. This is indeed a
welcome step, a step towards a truly global and liberal
economy. Here we are focusing on abuse of dominant
position of enterprises. Most competition laws across
the globe primarily deal with three areas namely, anti-
competitive agreements, the abuse of dominant
position and mergers/combinations.
Ordinarily, merely the fact that a firm or enterprise is
in a dominant position is not prohibited by competition
laws. For instance in EU laws in N.V. Netherlands
Banden Industry Michelin v. Commission of the
European Communities it is observed that a finding
that an undertaking has a dominant position is not a
recrimination but simply means that irrespective of
the reasons for which it has such a dominant position,
the undertaking concerned has a special responsibility
not to allow its conduct to impair genuine undistorted
competition in the common market. In United States
vs. International Harvester Co. the court citing the
case of United States vs. United States steel
Corp observed that law does not make mere size of
corporation, however impressive, or the existence of
exerted power on its part, an offence when
accompanied by unlawful conduct in the exercise of its
power. The laws of most jurisdictions prohibit the
abuse of dominant position/misuse of market power
by enterprises.
Case Citations Needed
19
 CONTENTS

18. Study of CCI Order in Cement Manufacturers Case

Part IV 19. Study of CCI Order in DLF Dispute

20. Study of CCI Order in MCX-SX Dispute

Select Case Studies 21. Study of CCI Order in Google Incs Abuse of
Dominance
22. Study of CCI Order in All India Tyres Dealers
Federation

20
 Chapter 18
Study of CCI Order in Cement Manufacturers
Case
(Mr. Vikas Singh & Mr. Shailesh Krishna)73
Introduction
India is the second largest producer of cement in the
world, only after China. The cement industry is a vital
part of the Indian economy, employing millions of
people directly or indirectly. The Competition
Commission of India (CCI) has recently passed
orders adjudicating allegations of anti-competitive
agreements and abuse of dominance amongst the
cement manufacturers under the Competition Act,
2002 (the Act) and imposed a penalty of more than
INR 60 billion (USD 1.1 billion).
This newsletter aims to critically analyze two CCI
orders of August 31, 2016, namely: (i) Builders
Association of India vs. Cement Manufacturers
Association & Ors. (BAI case) and (ii) In Re: Alleged
Cartelization by Cement Manufacturers (Cement
case). It attempts to highlight the impact of these
landmark orders on the cement industry and Indian
competition law.
Facts
BAI case: An information was filed under S. 19(1)(a)3
of the Act by the Builders Association of India (the
Informant) against Cement Manufacturers
Association (CMA) and 11 cement manufacturing
companies4, for alleged violation of S. 3 (anti-
competitive agreement) and S. 4 (abuse of dominant
position) of the Act. On June 20, 2012, the CCI found
the parties in contravention of S. 3(3)(a) and S.
3(3)(b)5 read with S. 3(1)6 and imposed monetary
73
Students of B.Com., LL.B. (Hons) 6 th Semester
penalty along with directions to cease and desist from
indulging in any anticompetitive activity. It further
prohibited CMA to engage and associate itself from
collecting and circulating information about wholesale
and retail prices and details on production and
dispatches of cement companies to its members.
Cement case: This case was received as a transfer
from the office of the erstwhile Monopolies and
Restrictive Trade Practices Commission under S.
66(6) of the Act.7 In the instant case, MRTP
Commission had taken suo moto cognizance and
initiated investigations based on the press reports
published regarding the increase in the cement
prices.8 Since the allegations and parties were similar
to the BAI case, except Shree Cement Limited
(respondents in BAI case and Shree Cement Limited
are hereinafter collectively referred to as
Respondents), simultaneous investigations were
conducted and the report was filed on May 31, 2011. As
findings and penalty for violation of S. 3(a) and S. 3(b)
read with S. 3(1) had been imposed in CCIs order in
BAI case, CCI limited this case for Shree Cement
Limited and observed that, it had violated the above
stated provisions of the Act and consequently imposed
a penalty of INR 3 billion (USD 59 million).74
Arguments
Reply of Ambuja Cement Ltd. (OP-3)
According to OP-3, the Indian cement industry has
added capacity in double digits during the last three
years, which is unprecedented in the last 20 years.
High capacity additions in a few years leads to lower
capacity utilization for a few years, till demand
catches up with capacity, leading to a rise in capacity
utilization levels. However, even with higher capacity
additions, the industry maintained a capacity
utilization of above 81% over the last few years.
Cement Industry has been acting rationally by basing
its capacity additions on forecasted demand and in a
74
E-Newsline September 2016
2
manner that is quite contrary to the behavior of
cartelists who would suppress capacity and
production in order to maintain prices at an elevated
level.
Reply of Jaiprakash Associates Ltd. (OP-6)
The OP has also argued that DG in his report has relied
upon statements of various third parties alleging the
coordinated behavior of the cement manufacturers
regarding the price and sale of cement to the different
segments of the consumers without even analyzing
them, without any evidence to show the alleged
coordinated behavior amongst the cement
manufactures.
Reply by India Cements (OP-7)
India Cements (OP-7) in its replies has submitted that
the Report of DG being premises on the
retrospectively of section 3 of the Act, which is not
authorized by any provisions of the Act, is illegal and
ultra vires. The report of DG is accordingly liable to be
rejected. According to OP-7, the report of DG is not
valid as the report has evidently considered
extraneous matters such as acts prior to May, 2009.
Further, the materials relied upon in DG report are not
provided to the parties. This act is in violation of
principles of natural justice. The Opposite Party has
further submitted that even the facts mentioned in the
report of DG taken as a whole, fail to establish the
existence of an agreement or understanding between
the Opposite Parties in contraventions of section 3 of
the Act as alleged. It is settled law that in the absence
of an agreement being conclusively established on the
facts of the case, the question of inferring an
anticompetitive practice within the meaning of section
3 of the Act does not arise. In the present case, there
is absolutely no shred of evidence to indicate such an
agreement between enterprises or association or
persons in the cement industry. After hearing parties
Commission notes that the following substantive
issues arise for determination in the case.
After hearing parties Commission notes that the
following substantive issues arise for determination in
the case.
Issue 1: Whether the Opposite Parties have
violated the provisions of section 4 of the
Competition Act, 2002 as has been alleged by
the informant?
Issue 2: Whether the acts and conduct of the
Opposite Parties are subject matter of
examination under section 3 of the Act?
Issue 3: Whether there exists an agreement
or arrangement among the cement
companies named as the Opposite Parties
under which they share details of cement
prices, production and capacities among
each other using the platform of CMA? If yes;
Issue 4: Whether they have indulged in
directly or indirectly determining the prices
of cement?
Issue 5: Whether they have indulged in
limiting and controlling the production and
supply of cement in the market?
Issue 6: Whether there is a case of
production and dispatch parallelism among
the Opposite Parties?
Issue 7: Whether the aforesaid acts of the
Opposite Parties have caused increase in
the prices of cement?
Issue 8: If so, whether the Opposite Parties
have contravened the provisions of section
3(3) of the Competition Act, 2002?
Finding of C.C.I. on issue No.1
The Commission accordingly holds that no
contravention of the provisions of section 4 of the Act
by any single cement firm or a group is made out in
the present matter.
3
Finding of C.C.I. on issue No.2
The Commission accordingly holds that the allegations
pertaining to the acts and conduct of the Opposite
Parties in the instant case are subject matter of
inquiry under section 3(3) of the Act.
Finding of C.C.I. on issue No.3 to 6
States that the relevant provision defined in section
2(b) is as follows:
agreement includes any arrangement or
understanding or action in concert, -
(i) whether or not, such arrangement, understanding
or action is formal or in writing; or
(ii) whether or not such arrangement, understanding
or action is intended to be enforceable by legal
proceedings;
The commission observes that existence of a written
agreement is not necessary to establish common
understanding, common design, common motive,
common intent or commonality of approach among the
parties to an anti-competitive agreement.
The Commission in light of the provisions of section 2
(b) of the Act and discussion as above, accordingly,
holds that in absence of any documentary evidence of
existence of an agreement, it is appropriate, correct
and logical to inquire into cases of anti-competitive
agreements on the basis of existence of evidences
which establish that particular set of act and conduct
of the market participants cannot be explained but for
some sort of anticompetitive agreement and action in
concert among them.
Circumstantial evidence is of no less value than
direct evidence for it is the general rule that the law
makes no distinction between direct and
circumstantial evidence . In order to prove the
conspiracy, it is necessary for the government to
present proof of verbal or written agreement.
The Commission observes that from the analysis of
data on production, dispatch and supplies in the
market it becomes clear that the cement companies
coordinate their actions as is apparent from the data
of dispatch in November 2010 which shows identical
and similar behavioral pattern in any cartelized
behavior, the parties to the arrangement may not
always coordinate their actions; periodically their
conduct may also reflect a competitive market
structure. However, there will be periods when
coordination rather than competition will be found
more gainful. This is reflective in the similar pattern of
dispatch observed among the cement companies
during November 2010. The coordination among them
gets facilitated since CMA circulates the production
and dispatch details of all the member cement
companies on regular basis. Further, the companies
are also exchanging information through CMA as
regards retail and wholesale prices.
Finding of C.C.I. on issue No.7
The Commission observes that in on-going cartel
activity where prices are being kept high over a long
period of time, it is not necessary that prices would
increase after every meeting, and that prices had
increased after the two meetings as brought out by DG
in his investigation raising suspicion of coordinated
action and discussion among the Opposite parties as
regards prices.
The Commission from the details of cost and sales
realizations as above observes that margins earned
by the Opposite Parties named in the information have
been quite impressive. The Opposite Parties have been
able to maintain a good profit margin in spite of
capacity additions over the year which repudiates
their stand that they have been earning even below re-
investment levels and that they are incurring losses.
Finding of C.C.I. on issue No.8
The Commission observes that on the basis of clear
admission of ACC and ACL to have attended the two
4
meetings of High Power Committee of CMA and denial
of this by CMA and Jaipraksh Associates, another
Opposite Party in the case reveal that the Opposite
Parties are not quite forthright in their submission.
The inconsistencies in the statements of different
Opposite Parties establish that they were keen on
hiding material information to the effect that the
competing cement companies are interacting among
each other using the platform of CMA and discussing
the prices, production, supplies of each other. On the
basis of clear admission of representatives of ACC and
ACL, it is clear that in spite of having resigned from
the membership of CMA, they are attending the
meetings of CMA. The fact that prices had increased
after the High Power Committee meetings held in
January and February 2011 establishes that they
coordinate their decisions and fix prices after due
consultations. Such an act and behavior of Opposite
Parties using the platform of CMA would be
questionable under the provisions of section 3(3) of
the Act which prohibit any act which results directly
or indirectly in fixation of the prices.
CCI OBSERVATIONS
The CCI passed the order following a probe by the
Director General of Investigation on a complaint filed
by Builders Association of India. Cement companies
have been under scrutiny since past one year. CCI felt
the cement firms act of controlling supplies and
determining prices was not only detrimental to
consumers but also to the economy since cement is a
crucial input in construction. India is the second
biggest producer of cement after China with a
capacity of
310 million tons75
Cement companies disappointed with
Competition Commission order.
India Cements and Madras Cements have expressed
indignation and disappointment over the
75
Source : The Hindu Business Line, 22.6.2012
Competition Commission of Indias order penalizing
them for manipulating the cement market. Both
companies have said they will file an appeal against
the order. They are among the 11 companies penalized
by the Commission on charges of cartelization. The
Commission has also held the industry body, the
Cement Manufacturers Association responsible.
According to spokespersons in the companies, India
Cements faces a penalty of Rs 187 crore and Madras
Cements, Rs 254 crore. Mr A.V. Dharmakrishnan, Chief
Executive Officer, Madras Cements, said the company
will appeal against the order. We are confident we
can get justice from the appellate authority. We have
done no wrong, he said. The Commission has given 90
days time to file an appeal. The company will have to
study in detail the 258-page order before it can react
specifically, he said. India Cements said in a statement,
there was no basis to arrive at conclusions that our
company has indulged in cartelisation and anti-
competitive practices.
While expressing disappointment with the order, the
company said it is retrograde to direct corporate
bodies to desist from pursuing lawful objectives.
Following a petition by the Builders Association of
India, the Commission, held 11 major cement companies
responsible for cartelization. It has levied a penalty of
50% of net profit for 2009-10 and 2010-11.76
Competition Commission of India imposes Rs
6,307 Crore penalty on 11 cement companies
The competition regulator has imposed an
unprecedented penalty of Rs 6,307 crore on 11 cement
makers, including the Indian arms of global leaders
Holcim and Lafarge, holding them guilty of
manipulating supplies and prices to post huge profits
at the cost of consumers and the economy.
The Competition Commission of India (CCI) has asked
the cement companies to pay up the fine in 90 days,
and told the Cement Manufacturers Association to
76
Source : The Hindu Business Line, 22.6.2012
5
stop collecting pricing data and circulating output and
dispatch details to its members. The order, first
reported by ET NOW, is expected to hurt the
profitability of cement makers, particularly smaller
companies that may become takeover targets for
bigger players, analysts said. Even if companies
litigate, the order has hurt their ability to raise prices
in the near future, they said.77

77
Source : The Economic Times, 22.6.2012

6
 Chapter 19
Study of CCI Order in DLF Dispute
(Ms. Suchi Nigam & Ms. Jyoti Yadav)78
Introduction
Fair Competition for Greater Good
Competition Commission of India is a body of the
Government of India responsible for enforcing The
Competition Act, 2002 throughout India and to
prevent activities that have an adverse appreciable
effect on competition in India. Section 7 of the
Competition Act authorized the Central Government, to
appoint for the purposes of the Act, a commission to
be called the Competition Commission of India
which has been established by the Central Government
with effect from 14th October, 2003. Competition
Commission of India aims to establish a robust
competitive environment through proactive
engagement with all stakeholders including
consumers, industry, government and international
jurisdictions. And to promote and sustain an enabling
competition culture through engagement and
enforcement that would inspire businesses to be fair,
competitive and innovative; enhance consumer
welfare; and support economic growth.
The main functions of the Competition Commission of
India includes that the Competition Commission of
India shall prohibit anti-competitive agreements and
abuse of Dominance and also regulate Combinations
(Mergers or amalgamations or acquisitions) through
the process of inquiry/investigations. It shall also give
opinion on competition issues on a reference received
from an authority established under any law (statutory
authority)/ Central Government/ a State Government.
Competition Commission of India is also mandated to
78
Students of B.Com., LL.B. (Hons) 6 th Semester
undertake competition advocacy, create public
awareness and impart training on competition issues.
Inquiry process of the Competition Commission of
India
1. INQUIRY-PROCESS: Receipt of Information or
Suo-moto or Reference.
2. PRELIMINARY ANALYSIS: If Commission is of
the opinion that there is a Prima Facie Case.
3. DIRECTOR GENERALS REPORT: Direction to
the Director General for Detailed
Investigation.
4. SUBMISSION OF DIRECTOR GENERALS
REPORT: Director submits investigation
reports to the Commission within a specified
time period; if commission feels so it may
ask for further investigation.
5. REPORT SENT TO BOTH PARTIES: Commission
sends Director Generals Report to both the
parties for inviting their objections and
comments.
6. APPROPRIATE ORDERS: After further analysis
and hearing the concerned parties the
Commission passes the appropriate orders.
Role of the Competition Commission of India
(Preamble of Competition Act, 2002):
To prevent practices having adverse effect
on Competition.
To promote and sustain competition in the
market.
To protect the interests of consumers.
To ensure freedom of trade carried on by
other participants in market in India79.
79
www.cci.gov.in/sites/default/files/presentation.../RajinderPrese
n041011.pdf?...1
7
Review of functioning of Competition Commission
of India:
In seven years of its functioning, the CCI has ordered
penalties totalling Rs. 13,900 crores, though only
Rs.82 crores has been actually paid and remaining
being under litigation. In the last 7 years, the CCI has
made its presence felt in various industries as diverse
as cement, automobiles, pharmaceuticals, real estate,
and information technology-enabled services. Some of
the major orders issued by CCI include:
DLF was fined in 2011 for abusing dominant
market position. The order against DLF has
set a new template between real estate
companies and consumers.
In 2011, the National Stock Exchange Ltd was
fined for abusing its dominant position in
currency derivative market.
DLF Dispute Case-Study
Name of the Case: Belaire Owners Association v. DLF
Limited & Others80.
Case No.: 19 of 2010
Information filed on: 05.05.2010
Date of Order: 12.08.2011
Informant: Belaire Ownerss Association
Opposite Party: DLF Limited & Others.
Forum: Competition Commission of India (CCI) &
Competition Appellate Tribunal (COMPAT)
Reason of Case: Abuse of Dominance in the Real Estate
Industry
Acts/Sections Referred of Competition Act, 2002 of
India:
80
Case no.19/2010
Section 4(2) (a): abuse of dominant position
when an enterprise or a group directly or
indirectly, imposes unfair or discriminatory
condition on goods and services.
Section 19 (4): Inquiry into dominant position
of enterprise
Section 19 1 (a): The Commission may inquire
into any alleged contravention of the
provisions on receipt of any information
from any person, consumer or their
association or trade association
Section 2 (u): Definition of service.
BACKGROUND OF THE CASE/FACTS:
DLF has launched a Group Housing Complex (The
Belaire) in Gurgaon and planned to construct 5 multi-
storied residential buildings. In its initial plan, DLF
designed five multi-storied buildings which would
consist of only 19 floors with a total of 368
apartments to be constructed within a period of 36
months.
In May 2010, the informant filed an instant case under
Section 19(1) (a) of the Competition Act, 2002 and
alleged that DLF, by abusing its dominant position,
imposed highly arbitrary, unfair and unreasonable
conditions on the informant through its agreements.
As a matter of fact, the rights of the informant in this
agreement were affected by the DLF. The Informant
further, alleged that the various clauses of the house
agreement had imposed unilateral and one sided
clauses and the action of DLF pursuant thereto was
prima facie unfair and discriminatory, thus attracting
the provisions of Section 4 (2) (a) of the Act.
DIRECTOR GENERALS REPORT:
The CCI, held that there was a prime facie case against
DLF under the Act, and asked Director General (DG) to
investigate the informants allegations on DLF, as a
dominant player in market and whether there exist a
relevant market. The DGs investigation report
observed that allegations made by the informant were
8
true and the Act was applicable in this respective
case. The DG report stated that since the cost of each
flat was more than 1.5 cores, DLF constituted the high
end residential market in Gurgaon. This was observed
that a customer wanting a flat in Gurgaon would not
look for a flat in other area, or go for a lower priced
flat still under development in the city. The DG report
further analysed, DLF in exercise of its market power
and dominance violated the Section 19 (4) and also has
imposed unfair conditions of sale to consumers, which
violated Section 4(2) (a) (i) of the Act.
ISSUES INVOLVED/STUDY OF CCI:
Issue 1: Do the provisions of Competition Act, 2002
apply to the facts and circumstances of the instant
case?
On the issue of jurisdiction, the CCI stated that the Act
applies to all the existing agreements which entered
into prior to the coming into force of Section 4.
Further, Commission placed reliance on several
Supreme Court judgments to conclude that housing
activities undertaken by development authorities are
considered as services and covered within the
definition of service as provided under section 2 (o) of
the Consumer Protection Act, 1986. Relying on the
definition of Service under Consumer Protection Act
and Sec 2 (u) of the Competition Act, CCI held that "it
is clear that the meaning of 'service' as envisaged
under the Act is of very wide magnitude and is not
exhaustive in application, thereby including the
activities undertaken by DLF within its ambit.
Issue 2: What is the relevant market, in the
context of Section 4 read with Section 2(r),
Section 19(5), Section 19(6) and Section 19(7) of
the Competition Act, 2002?
The commission on the issue of relevant product &
service market held that a relevant market is
delineated on the basis of a distinct product or service
market and a distinct geographic market. These terms
have been defined in Section 2(r) of the Act read with
Section 2(s) and Section 2(t).
DLFs high end residential building in Gurgaon targets
only specific consumers, according to their capacity
to pay. On the issue of relevant geographic market,
CCI stated that a decision to purchase a high-end
apartment in Gurgaon is not easily substitutable by a
decision to purchase a similar apartment in any other
geographical location. Thus the Commission was of the
view that Gurgaon is known to posses certain unique
geographical characteristics such as its proximity to
Delhi, proximity to airports and a distinct brand image
as a destination for upwardly mobile families.
Issue 3: Is DLF dominant in the above relevant
market, in the context of Section 4 read with
Section 19 (4) of the Competition Act, 2002?
The commission analysis, as per the Section 4 (a) and
Section 4 (a) (ii), DLF position of dominance in the
relevant market cannot be ignored as its advantages
of over competitors in size and resources, and
concluded DLF operate independently of competitive
forces prevailing in the relevant market or to affect
its competitors or consumers or the relevant market
in its favour. It was held that DLF had the highest
market share (45%), vis-a-vis the market share of the
nearest competitor (19%) which was more than twice
of its competitor, leading to hardly any competitive
constraints. Further, DLF had a clear early mover's
advantage and occupies a leadership position as real
estate is a sector with natural entry barriers due to
high cost of land and brand value of incumbent market
leaders.
Issue 4: In case DLF is found to be dominant, is
there any abuse of its dominant position in the
relevant market?
On this issue, the CCI held that DLF has resorted to
malpractice in the agreement and its acts of abuse of
dominance position can be clearly seen in this case.
The abuse was alleged to be committed by imposing
9
unfair conditions on the buyer through the Provisional
Booking agreement, which is signed by the buyer after
having paid substantial costs, therefore, DLF leaving
no option to the buyer to object to loop-sided
provisions of the agreement.
There are some clauses analysed by CCI, such as DLFs
right to change the layout plan without consent of
allottees, DLF unilateral power to make changes in the
agreement and the power to supersede without any
right to the allottees. DLF continues to enjoy full rights
on the community buildings and sites, there was no
rights given to the buyer in this regard and further,
allottees have no exit option except when DLF fails to
deliver possession within agreed time, but even in that
event he gets his money refunded without interest
only after sale of said apartment by DLF to someone
else. The CCI held that these are evidences of unequal
bargaining power between the parties.
COMPETITION COMMISSION OF INDIA AND
COMPETITION APPELLATE TRIBUNAL ORDER:
On this case, CCI held that DLF has contravened the
section 4 (2) (a) (i) and (ii), directly and indirectly,
imposing unfair or discriminatory conditions in the
sale of services. CCI found DLF guilty of abusing its
dominant position in the market and imposed a penalty
of Rs. 630 crores on DLF. The CCI further directed DLF
to cease and desist from formulating and imposing
such unfair conditions in its Agreement with buyers in
Gurgaon and to suitably modify unfair conditions
imposed on its buyers as referred to above, within 3
months of the date of receipt of the order on DLF.
DLF challenged the CCI order before COMPAT which
granted stay order against the CCI order of imposing
penalty under section 27 (b) of the Act subject to DLF
furnishing an undertaking to pay 9% interest on the
amount of penalty to be determined by COMPAT for the
period from the date of order by CCI till the date of
payment by DLF. Further, COMPAT ordered that the
directions of CCI for modifications of terms of the
Agreement shall remain in abeyance. However, the
direction of CCI to "cease and desist" with the
implementation of the Agreement was not stayed.
As per the COMPAT remand, both the parties submitted
the modified terms and conditions before CCI. The CCI
after hearing both the parties, has modified the
standard terms and conditions of the flat buyers
agreement in its simple meaning order with deleting
nearly 16 clauses from the agreements. This modified
agreement order by CCI was again challenged by the
DLF in COMPAT. The case is still pending with the
COMPAT.
ANALYSIS OF THE JUDGEMENT/ORDER:
The recent order dated 03.01.2013 by CCI in the DLF
case is not applicable to the flat buyer agreements of
the other builders. If the CCI order on modified buyers
agreement is supported by COMPAT, it would be huge
relaxation to all the property buyers who have
invested huge amount and not satisfied with the
service provided by builders. In this order, CCI has
tried to remove the unfair and one sided clauses in the
Flat Buyer Agreement which were till now common to
most of similar agreements of other builders. DLF will
have a chance to go Supreme Court against COMPATs
order. This case can make a change in the whole real
estate sector, if the apex court approves the
modifications. It will affect the industry in a big way.
The real estate sector will have to stop any
exploitative business practices.
There are large numbers of cases pending in different
forums because of little awareness about the reach of
the competition law. To stop exploitative business
practices and unfair & monopoly services to the
consumers, there is a demand for proper guideline in
this sector, which only can be possible with the
positive order by the Supreme Court. So till then, it is
the consumer and buyers have to keep their faith and
patience on the CCI, COMPAT and Apex Court81.
81
circ.in/pdf/Case_Study_08.pdf
10
 Chapter 20
Study of CCI Order in MCX-SX Case
(Mr. Shivam Tiwari & Mr. Utkarsh Mishra)82
Introduction
Forum:
Competition Commission of India (CCI), New Delhi
Act/ Sections:83
The Competition Act, 2002
1. Section 2(r) relevant market
2. Section 4 Abuse of dominant position
3. Section 19 Inquiry into certain agreements and
Dominant position of enterprise
4. Section 26 (1) Procedure for inquiry under
Section 19
5. Section 27 Orders by commission after inquiry
Onto agreements or abuse of dominant position
Parties:
Informant- MCX Stock Exchange Ltd.84
MCX is a public limited company incorporated on
August 14, 2008. MCX-SX is a stock exchange
recognized by the Securities and Exchange Board of
India (SEBI) under Section 4 of the Securities Contract
(Regulation) Act, 1956. It has regulatory approvals to
operate an exchange platform for trades in Currency
82
Students of B.Com., LL.B. (Hons) 6 th Semester
83
Hereinafter referred to as the Act.
84
Hereinafter referred to as MCX-SX.
Derivatives (CD segment). The promoters of the
company are Financial Technologies of India Ltd. (FTIL)
and Multi Commodity Stock Exchange of India Ltd.
(MCX). FTIL is engaged in the business developing and
supplying software for financial and securities market.
The main software product of FTIL is marketed under
the brand name ODIN and is used by many members
of NSE, BSE and IP company.
2. Opposite Party (OP) - National Stock Exchange
of India Ltd. & Ors.85
NSE was incorporated in November 1992 and
recognized as a stock exchange in April, 1993 under
SCR Act, 1956. NSE has it operations running in various
segments including WDM, Equity, Options/Futures on
Individual Securities and CD segment. Omnesys is a
software producer for financial and security market.
NSE has 26% stake in it via DotEx which is a 100%
subsidiary of NSE. The DotEx / Omnesys has
introduced a new software known as NOW to
substitute a software called ODIN developed by FTIL.
After taking the stake in Omnesys, DotEx intentionally
wrote individually to the NSE members offering them
NOW free of cost for the next year. Simultaneously,
NSE has refused to share its CD segment Application
Programme Interface Code (APIC) with FTIL, thus
disabling the ODIN users from connecting to the NSE
CD segment trading platform through their preferred
mode.
Allegations on NSE:
The informant alleged violation of Section 3 and 4 of
the Act on account of anti- competitive behaviour and
abuse of dominant position. According to the
information, various fee waivers and the low level of
deposit requirements only with respect to the CD
segment of NSE were considered completely at a
variance with its conduct in other segments and were
aimed at eliminating competition and discouraging
85
Hereinafter referred to as NSE.
11
potential entrants. This included a transaction fee
waiver on currency future trades executed on NSE, no
admission for membership in its CD segment of NSE,
no annual subscription charges, no fee for providing
data feed in respect to its CD segment of NSE, refusal
to share its CD segment APIC with FTIL, thus disabling
ODIN users from connecting to the NSE CD segment.
Issues on which DG investigated the matter and
the DG Report
(a) Delineation of relevant market
(b) Assessment of dominant position
(c) Abuse of dominant position
(d) Applicability of Section 4 (2) (e) of the Act.
ISSUES FOR DETERMINATION IN THIS CASE:
a) What is the relevant market, in the context of
section 4 read with section 2 (r) and section 19
(5) of the Competition Act, 2002?
To determine the relevant market in the instant case,
the Commission relied on the Report of the Internal
Working Group of RBI, which had advocated a clear
separation of CD segment from other segments in any
stock exchange. CCI observed that as underlying
assets, equities and currencies are entirely different;
Consequently related derivatives are also different.
Trading platforms of stock exchanges for the two
categories of products (assets or derivatives) are,
therefore, also in different market. From any practical
point of view, a product over CD segment exchange
cannot be said to be either interchangeable or
substitutable by a product in segments like equity and
F&O for the purchaser.
The Commission decided that the stock exchange
services in respect of the CD segment in India are
clearly an independent and distinct relevant market.
(b) Is any of the OPs dominant in the above
relevant market, in the context of section 4 read
with section 19 (4) of the Competition Act?
The Commission examined the market share of NSE
and its operations in other segments and found that it
has high degree of vertical integration from trading
platform, front-end information technology, index
services, etc. It was of firm opinion that NSE has a
position of strength and enjoys a dominant position in
the relevant market in the context of Section 4 read
with Section 19 (4) of the Act.
(c) Is there any abuse of its dominant position in
the relevant market by the above party?
The Commission via the previous NSE circulars found
that the informant has been facing the restraint Of
zero fees since the beginning. The pattern of
behaviour of NSE suffered from inconsistency and the
Commission concluded that nothing can be reliably
derived from these behavior patterns that would
reasonably lead to the conclusion that they have
consistently followed a philosophy of fee waivers in
nascent market. However, the Commission concluded
that the zero price policy of NSE in the relevant
market is unfair and can be termed as destructive
pricing.
On Monopoly leveraging:
The Commission opined that NSE by not charging
transaction fee is subsidizing activities in CD segment
which is open to competition and is using its monopoly
profits to leverage its position. NSE is also creating
barriers for users of ODIN software by not providing
APIC to its own software NOW. It was held to be using
its position of strength in the non CD segment to
protect its position in the CD segment.
Order of the Commission:
NSE was directed to modify its zero price policy in the
relevant market and to cease and desist from unfair
12
pricing, exclusionary conduct and unfairly using its
dominant position in other market/s to protect the
relevant CD market with immediate effect. The
commission levied a penalty on NSE equivalent to 5%
of their average turnover amounting to a total of INR
55.5 Crores (USD 12.23 Mn).

Analysis of the Order:

The order articulates the core competition concepts

viz. relevant market, dominance, and abuse of
dominance, SSNIP test, predatory pricing and
monopoly leveraging. However, in a case so
complicated as this, CCI should have adopted a more
comprehensive and rigorous analysis. The Commission
seemed reluctant to go into the issue of predatory
pricing. Lastly, on the issue of penalty, CCI must come
up with comprehensive guidelines on how to calculate
the penalties and on what grounds the penalties can
be said to be aggravated or mitigated.

The present case went to COMPAT 86 which granted a

conditional stay on payment of the penalty, but on the
condition that the NSE, if found guilty, will have to pay
interest at the rate of 9 per cent on the amount from
the date of the CCI order till the date of payment.

86
Order passed by Competition Appellate Tribunal on September
8, 2011, available at
http://compat.nic.in/upload/PDFs/sep%20orders/8.9.11.pd f, as
accessed on September 6, 2013

13
 Chapter 21
Study of CCI Order in Google Incs Abuse of
Dominance
(Mr. Shubham Tripathi & Mr. Ashwani Singh)87
Introduction
The Competition Commission had ordered probe
against Google in four different cases for alleged
abuse of dominant position. 88 CCI had directed its
Director General (DG) to investigate these cases
under the provisions of the Competition Act in two
cases filed by Consim Info Pvt Ltd and Consumer
Unity & Trust Society, both against Google Inc and
Google India Pvt Ltd 89 ; a combined investigation
report has been submitted by DG, CCI. DG is the
investigation arm of the regulator and cases are
referred to it by the Commission when there is prima-
facie evidence of violations.
The CCI has the power to impose the highest economic
penalties in India. In case of contravention of section 4
of the Act, the CCI is empowered to levy a penalty of
up to 10 per cent of the average turnover of the
enterprise for the preceding three financial years or
direct the division of a dominant enterprise. However,
as there are no guidelines issued by the CCI in relation
to the determination of penalties, the CCI currently
has absolute discretion in relation to the imposition of
a penalty. The CCI further clarified that in case of any
non-compliance with the directions of the director
general in future; each instance of non-compliance
87
Students of B.Com., LL.B. (Hons) 6 th Semester
88
Available At:
http://www.cci.gov.in/sites/default/files/Newsletter_document
/nl17.pdf(Last visited on 18th February 2017)
89
Case Nos. 7 and 30 of 2012.
would be taken separately as an aggravating factor
for the imposition of a fine.90
Background
The Competition Commission of India
(CCI/Commission) passed an order on March 26,
2014 imposing a fine of Rs. 10 Million on Google USA
and Google India (Google) as they had failed to
cooperate with the Director General (DG) in relation
to an investigation (CCI Order).91 The DG was acting
pursuant to information filed by Consim Info Private
Limited and Consumer Unity & Trust Society
(Informants).
The imposition of penalty arose in the context of
collateral proceedings initiated by the DG since
Google, allegedly, was not cooperating with the DG. On
an examination of the various notices sent by the DG,
the replies sent by Google, the information supplied
and the conduct of Google, CCI held that Google failed
to show cause as to why penalty ought not to be
imposed on them.
The present ruling is only confined to imposition of
penalty due to a partys failure to comply with
directions of the DG under Section 43 of the
Competition Act, 2002 (Competition Act). Google will
have to comply with the directions of the DG and
submit the relevant information. After completion of
investigation, CCI will examine whether there is a
violation of Section 3 and Section 4 of the Competition
Act.
Facts
90
Available at:
http://indianexpress.com/article/technology/tech-news-
technology/google-misusing-search-dominance-in-india-says-
dg-report-to-cci/ (Last visited on 18 th February 2017)
91
Case No. 7 of 2012, In Re: Consim Info Private Limited v. Google
Inc., USA and Google India Private Limited and Case No. 30 of
2012, Consumer Unity & Trust Society (CUTS) v. Google Inc., USA
and Google India Private Limited.
14
Cases filed by the informant alleging that Google
enjoyed a dominant position and was conducting its
business in a manner that was discriminatory, by
manipulating algorithms and was causing harm to
advertisers and indirectly consumers. It was further
alleged that by using a number of vertical services
such as Youtube, Google News, Google Maps etc., it
mixed many vertical results into generic search
results. Informants contended manipulation in search
results and that there was also denial of access and
creation of entry barriers for competing search
engines etc. CCI concluded that prima facie Googles
had abused its dominant position and that a case had
been made within the meaning of Section 26 (1) of the
Competition Act. Consequently, DG was directed to
carry out investigation in respect of Case No. 7 of 2012
and Case No. 30 of 2012.92
Show Cause Notice against Googles Failure in
Compliance
During investigations DG sought information through
several notices in respect of which DG contended that
Google did not comply. 93 Due to Googles failure to
comply with the notices, DG reported the matter to
CCI. It is important to note that CCI has taken a
serious note of the conduct of Google and observed
that Google showed an attitude of either withholding
the information or furnishing only a part of the
information sought. On account of this, CCI inferred
that there was a willful disregard on the part of
Google to comply with the information requests of DG.
CCI issued a show cause notice to Google as to why
measures under Section 43 of the Competition Act
should not be taken against Google (Show Cause
Notice). Section 43 of the Competition Act provides
that if a person to whom directions have been issued,
either by CCI or the DG, fails to comply with such
directions, CCI may impose a fine of up to Rs. 1 Lakh
92
CCI Order dated June 20, 2012.
93
Show Cause Notice references letters dated 12.02.2013,
26.09.2013, 11.10.2013, 13.11.2013, 27.11.2013, 03.12.2013 and
21.12.2013.
per day of continuing non-compliance subject to a
maximum of Rs. 10 Million.94
Arguments in the Proceeding under Section 43
The issue before CCI was confined solely to Googles
compliance with the Show Cause Notice and not the
substantive issues in the cases filed. In its defence,
Google contended that Google there wasnt
unreasonable delay on its part. Google sought to
substantiate its bona fides by demonstrating that it
had in fact cooperated with the DG. On the substantial
queries raised by the DG, Google contended that the
queries raised by DG were quite complex, broadly-
worded, reaching into several commercial
aspects/transactions and hence these required time
to obtain information. Google contended that in neither
case, a timeline of alleged violations was indicated and
consequently, Google was required to obtain
information for an undefined period and the
investigation was open-ended and that the
investigation expanded over time and covered every
facet of Googles business. Google provided a timeline
setting out the sequence of events to demonstrate
that it had been cooperating with DG. While some delay
was acknowledged, it was contended that this was
unintentional and only for the purpose of ensuring that
complete information was submitted. Google also
sought to allay CCIs apprehensions that it was
withholding any information at all and in fact was
taking all measures possible to furnish information
and cooperate with DG. Google also addressed CCI on
issues of law and submitted that for the purpose of
exercising jurisdiction under Section 43 of the
Competition Act, there should have been non-
compliance and not belated disclosure, relying on
Kingfisher Airlines Limited v. Competition Commission
of India & Ors. 95 Google also contended that the
94
Available at: http://www.bgr.in/news/cci-probe-against-
google-in-four-cases-for-alleged-abuse-of-dominant-position-
arun-jaitley/ (Last visited on 19th February 2017)
95
Order of COMPAT in Appeal NO. 15 of 2012, dated 29.08.2012.
15
Supreme Court had recognized the principle that
penalty was to be imposed only in cases of deliberate
non-compliance. Factually, Google sought to
corroborate its contentions with the various
submissions and information provided by Google.
Google also placed reliance on Section 43 of the
Competition Act and contended that the provision itself
contemplated reasonable cause and hence CCI ought
to determine with the delay in submission by Google
was with cause or without cause.
CCI Order in The Case
CCI identified following broad topics on which DG had
requested information:
Information related to algorithmic changes
CCI concluded that as on 15.01.2014, Google
had not yet supplied information relating to
algorithmic changes;
Non-submission of agreements CCI
concluded that in spite of extensions, Google
did not supply the requisite information;
Non-submission of documents relating to
Octathorpe and Adsense Account CCI
concluded that Google had not submitted
complete documents relating to the query
raised by DG;
Non-submission of documents relating to
termination/suspension of tech-support
Adword accounts CCI concluded that
Google did not submit complete documents,
although some documents were indeed filed;
Non-furnishing of information pursuant to
depositions CCI concluded that Google
failed to produce documents after making
oral depositions. CCI noted that Google
neither sought additional time nor made any
communication.
In view of the above, CCI concluded that Google failed
to comply with directions of DG and that Google had in
fact engaged in dilatory tactics to procrastinate the
investigation. CCI rejected Googles contentions that
the queries were too broad, covered wide-range of
subjects and drew an adverse inference against
Google merely because Google conceded that there
was delay. Ironically, even though Google in a show of
bona fides acknowledged delay, albeit with cause,
Googles acknowledgement of delay has been held
against it. CCI concluded that Google had given
frivolous and vexatious pleas in an attempt to stall
investigation and Google sought to avoid compliance.
CCI concluded that Google had failed to demonstrate
reasonable cause as per Section 43 of the
Competition Act. However, in view of the submissions
already made by Google, CCI imposed a fine of Rs. 10
Million, to be deposited within 60 days from receipt of
the CCI Order. CCI further notes that in the event that
Google failed to comply with future directions from
either the DG or CCI, additional fine would be imposed
CCI held that each and every act of non-compliance
of Google would give the DG fresh cause of action
against Google.
Analysis Report
Response to show cause notices requires extreme
care. It is imperative for companies to ensure
satisfactory compliance while responding to show
cause notices (See Nishith Desai Associates article on
responding to show cause notices) 96 in form and
substance. Although from Googles contentions it
would seem that Google did all that it could reasonably
be expected to, it would seem that CCI has unfairly
drawn an adverse inference against the belated
submission / non-submission. The rejection of
96
Show Cause for Litigation, Vivek Kathpalia and M.S. Ananth,
Nishith Desai Associates, Hindu Business Line,
availableat: http://www.thehindubusinessline.com/opinion/show-
cause-for-litigation/article4891879.ece.(Last visited on 19 th
February 2017)
16
Googles argument that a distinction should be made
between wilful default and belated submissions would
seem harsh. CCI has also not provided any rationale
on the basis of which the maximum amount of Rs. 10
Million has been imposed, particularly, when CCI notes
that Googles submission of some information was in
fact a mitigating circumstance.

CCI has shown willingness to exercise all powers that

it may have to ensure objectives of CCI are fulfilled.
Consequently, companies should take notices from CCI
(and for that matter, any sectoral regulator)
extremely seriously as the consequences of non-
compliance can be quite drastic. Google has the right
to appeal under Section 53B of the Competition Act.
Given the adverse inferences drawn, Google may be
tempted to challenge the CCI Order. For its part, we
can expect CCI to get stricter with other companies
and not hesitate to impose fine under the Competition
Act. Imposition of fines and drawing adverse
inferences are harsh measures and it would be
reasonable to expect that CCI comes out with
guidelines on imposing fines.

17
 Chapter 22
Study of CCI Order in All India Tyres Dealers
Federation
(Mr. Mohd. Burhanuddin Khan & Mr. Vaibhav Yadav)97
Introduction
Act/ Sections referred: The Competition Act, 2002
1. Section 2(r) relevant market
2. Section 4 Abuse of dominant position
3. Section 19 Inquiry into certain agreements
and dominant position of enterprise
4. Section 26 (1) Procedure for inquiry under
Section 19
5. Section 27 Orders by commission after
inquiry onto agreements or abuse of
dominant position
Parties:
1. Informant- All India Tyre Dealers
Federation
2. Opposite Parties - Tyre Manufacturers
I. Facts of the case
The All India Tyre Dealers Foundation complained to
the Government that tyre manufacturers in India were
colluding in price and trading malpractices. This case
was referred to CCI after promulgation of the
Competition Act, 2002 (Act). CCI formed a prima
facie opinion of cartelization and ordered an inquiry by
the Director General (DG). The DG, in his report,
concluded that there was a cartel among tyre
manufacturers in India based on economic evidence
including:
97
Students of B.Com., LL.B. (Hons) 6 th Semester
(i) Price parallelism across the
manufacturers related to the net
weighted average dealer price of tyres
and the percentage change in prices;
(ii) Positive correlation of data involving
production, capacity utilization, cost
analysis, cost of sales, margins, etc.
The regulator was investigating
alleged cartelisation charges against five major
tyre companies - Apollo Tyres, Birla Tyres, MRF, Ceat,
and JK Tyre -- which control 95% of the tyre market,
and also the Automotive Tyre Manufacturers'
Association (ATMA), since 2010.
Competition watchdog CCI has found no evidence
of cartelisation in the tyre industry and has decided
against imposing any penalty on manufacturers
including Apollo Tyres, MRF, JK Tyre, Ceat and Birla
Tyres, an official said.
Generally, cartelisation refers to entities entering into
agreements whereby they decide not to compete on
price or product or customers. Such practices
adversely impact overall competition in the
market. Cartelisation is prohibited under Section 3 of
the Competition Act.
Summary of findings of the DG
Based on above analysis the DG returned the following
findings:
(i) The tyre companies have not passed on
the benefit of reduction in excise duty to
the consumers.
(ii) Price parallelism existed amongst the
tyre companies.
(iii) The tyre companies have not reduced
the Net Dealer Price (weighted price) in
proportion to the actual production.
18
 (iv) The tyre companies have not utilized
their full capacity which resulted in
limiting the supply.
(v) The companies have been able to earn
positive margins in most of the period
under investigation.
(vi) The tyre companies have been inflating
some miscellaneous expenses into the
cost of production to reduce the net
profit margins. Similarly, the analysis
also explains that the change in price of
natural rubber had no impact on the
cost of production and therefore, it does
not explain the possible reason for the
increase in price of tyres.
(vii) The tyre companies are operating on
high margins and the same is not
passed on to the consumers.
(viii) The five domestic tyre companies
occupy about 95% of the market share
of the total production. This high 22
concentration made OEMs and the
replacement market highly dependent
on these companies.
Conclusions of the DG
Based on the above findings, the DG concluded that the
major domestic tyre companies acted in concert and
ATMA provided the platform to the members for
exchange and sharing of information relating to price,
export, import, OEMs etc. Thus, the DG concluded that
ATMA and its five major domestic tyre manufacturing
companies (Apollo, MRF, J K Tyre, Birla and CEAT) have
acted in concert in contravention of the provisions of
section 3(3)(a) and 3(3)(b) of the Act.
Issues for determination in the case
In view of the contentions raised by the parties and
the findings recorded by the DG, following issues arise
for determination:
(i) Whether the Commission has the
jurisdiction to proceed with the matter
under the provisions of the Competition
Act, 2002?
(ii) Whether the tyre manufacturers have
contravened the provisions of section 3
of the Act?
Determination of Issue No.1
The Commission notes that in the present case, the
investigations were initiated on the basis of complaint
of AITDF. As the investigations under the MRTP Act
could not be completed, the matter was transferred to
the Commission in terms of the provisions of section
66 of the Act. In the meantime, the provisions relating
to anti-competitive agreements and abuse of dominant
position of the Act were notified, the conduct of the
parties has been examined by the Commission post
such notification of the provisions.
Issue No.2
Whether Agreement can be inferred from
circumstantial evidence?
The DG has failed to gather any direct evidence to
support his findings, and relied upon the decision of
the Commission in the case of Neeraj Malhotrav.
Deutsche Post Bank,98 to contend that to establish a
finding of infringement under section 3(1) read with
3(3) of the Act, the agreement must be established
unequivocally.
Section 3(1) of the Act prohibits any agreement with
respect to production, supply, distribution, storage,
acquisition, or control of goods or provision of
98
Case No. 05 of 2009
19
services which causes or is likely to cause an determination was only possible based
appreciable adverse effect on competition within India. on circumstantial evidence. In this
Further, section 3(2) of the Act provides that any regard,
agreement in contravention of this provision shall be
Findings of CCI
void.
(i) the DG had failed to study the price-cost
The Commission in light of the provisions of section
trend;
2(b) of the Act as discussed above holds that in
absence of any documentary evidence of existence of (ii) the price parallelism methodology was
an agreement, it is appropriate and logical to inquire not sound since there was no
into cases of anti-competitive agreements on the parallelism in absolute prices and price
basis of existence of evidences which establish that movement but only in the directional
particular set of acts and conduct of the market change of prices;
participants cannot be explained but for some sort of
anti-competitive agreement and action in concert (iii) capacity utilization showed mixed trends
among them. and suppression of capacity made little
sense in light of imports;
II. Decision and Reasoning
(iv) There was no uniformity in margin
To arrive at its final decision, CCI first considered trends;
various structural factors conducive to cartelization.
These included (v) excessive margins were absent and
varied from 1% to 10%;
(i) The highly concentrated market for tyre
manufacturers where 5 manufacturers (vi) Rise in market share of one of the
control 95% of tyre production. This manufacturers was inconsistent with
could give rise to collusion but may also cartelization; the activities of the trade
indicate rational conscious parallelism association did not contravene the Act.
where competing firms are conscious of Based on these findings, CCI held that
each others activities; the evidence was insufficient to
substantiate the claim of cartelization
(ii) the cyclical and predictable nature of among tyre manufacturers.
demand for tyres;

(iii) homogenous products;

(iv) competitive constraints of re-treaded

tyres and imports; entry barrier caused
by the requirement of substantial
capital investment;

(v) Existence of an active trade association.

Some of these factors support
cartelization while others militate
against it. According to CCI, a conclusive

20
 Chapter 23
Study of CCI Order in Abuse of Dominant
Position by BCCI
(Mr. Vaibhav Jha & Ms. Deeksha Singh)99
Introduction
Competition is the best means of ensuring that the
Common Man has access to the broadest range of
goods and services at the most competitive prices.
The Competition Act, 2002, as amended by the
Competition (Amendment) Act, 2007, follows the
philosophy of modern competition laws. The Act
prohibits anti-competitive agreements, abuse of
dominant position by enterprises and regulates
combinations (acquisition, acquiring of control and
M&A), which causes or likely to cause an appreciable
adverse effect on competition within India.
sThe objectives of the Act are sought to be achieved
through the Competition Commission of India (CCI),
which has been established by the Central Government
with effect from 14th October 2003. CCI consists of a
Chairperson and 6 Members appointed by the Central
Government.
1. It is the duty of the Commission to eliminate
practices having adverse effect on
competition;
2. To promote and sustain competition;
3. To protect the interests of consumers and
ensure freedom of trade in the markets of
India.
4. The Commission is also required to give
opinion on competition issues on a reference
received from a statutory authority
99
Students of B.Com., LL.B. (Hons) 6 th Semester
established under any law and to undertake
competition advocacy;
5. To create public awareness and impart
training on competition issues.100
In this particular case Competition Commission of
India which is CCI has taken urge against Board of
Control for Cricket in India which is BCCI for violating
section 4(2) of the Competition Act101, 2002.
o The CCI had make the first step by
conducting an enquiry against the BCCI for
abusing their dominant position in market for
the team rights and collaborating with
organization of the Indian Premier League
which is IPL.
o The CCI played a further role by directing
the Director General to actively investigate
further against the allegations made by CCI
and hence submit a report. Based on
aforementioned report, the Commissions had
arrived to a set of conclusions.
Competition Appellate Tribunal 102 has set aside a CCI
order against cricket governing body BCCI for alleged
abuse of dominance, saying the regulator relied on
"legally unsustainable" information downloaded from
internet for nailing the Board.
In its order passed in February last year, the
Competition Commission of India (CCI) had imposed a
penalty of Rs 52.24 crore on the Board of Control for
Cricket in India (BCCI) after finding it guilty of
indulging in anti-competitive practices in organization
of Indian Premier League (IPL)103.
100
About CCI, http://www.cci.gov.in/about-cci visited on
19/02/17
101
Competition Act, 2002 (12 of 2003) can be viewed here
http://www.cci.gov.in/sites/default/files/cci_pdf/competitiona
ct2012.pdf visited on 19/2/17
102
Can be viewed here , http://compat.nic.in/ visited on
19/02/17
103
PTI, Compact set aside CCI Penality Against BCCi for Alleged
abuse of Dominance ,
21

Now the most relevant question here is that, how they
come to the set of conclusion that the BCCI has
abused its dominant position in market under CCI and
CCI order fine of Rs. 52.24 crore on BCCI104
Before answering to this question it is needed to first
draw certain conclusion from the case and look on all
the aspect and key part of the case.
First aspect: statuary aspect of CCI Section 4(2)
and how its abuse of dominant position:-
Section 4 of the Act prohibits an enterprise or group
from abusing its dominant position. It must be noted
that the prohibition is on abuse of dominant position
and not being in a dominating position. And section 4, it
is clear says that restriction of abusing a dominant
position is on a group or an enterprise. That the Act
defines an enterprise as "a person or a department of
the Government, who or which is, or has been,
engaged in any activity, relating to the production,
storage, supply, distribution, acquisition or control of
articles or goods, or the provision of services, of any
kind, or in investment, or in the business of acquiring,
holding, underwriting or dealing with shares,
debentures or other securities of any other body
corporate, either directly or through one or more of
its units or divisions or subsidiaries, whether such
unit or division or subsidiary is located at the same
place where the enterprise is located or at a different
place or at different places, but does not include any
activity of the Government relatable to the sovereign
functions of the Government including all activities
carried on by the departments of the Central
http://economictimes.indiatimes.com/news/sports/compat-
sets-aside-cci-penalty-against-bcci-for-alleged-abuse-of-
dominance/articleshow/46352684.cms visited on 19/02/17
104
Economic Times, Compact sets aside CCi penalty against
BCCCI for alleged abuse od Dominance
http://economictimes.indiatimes.com/news/sports/compat-
sets-aside-cci-penalty-against-bcci-for-alleged-abuse-of-
dominance/articleshow/46352684.cms visited on 19/02/12
Government dealing with atomic energy, currency,
defense and space."
Under Section 4 of the Act, it explained that the
dominant position and its means a position of strength
enjoyed by an enterprise in a relevant market in India.
It enables the enterprise to: a) act independently or b)
affect its competitors or consumers in its favor.
And also its determination of abuse depends upon
behavior of the enterprise. There are two types of
abusive behaviors: exploitative and exclusionary.
Exploitative behavior harms the consumers
e.g. Unfair prices, trading conditions etc.
Exclusionary behavior harms the
competitors of the enterprise by foreclosing
them from the market e.g. Exclusive dealing,
refusal to supply, tying and bundling. And
Hence BCCI Case is related to Exclusionary
behavior.
For the BCCI to be hit by section 4 of the Act it would
have to be considered within the ambit of the definition
of enterprise or a group. Logically the BCCI cannot be
considered as a group and hence it can assume that
the CCI considered the BCCI to be an enterprise
Second aspect: BCCI comes under a
group/enterprise/ a society (non-profit):-
BCCI is a society registered under Tamil Nadu
Societies Registration Act, 1975 105 . Its primary
objective are of controlling the game of cricket in
India, promoting the game in India, framing the laws of
cricket in India, selecting teams to represent India in
Test Matches, ODIs and Twenty 20 matches played in
India or abroad106. During the course of investigation
for the purpose of this matter, it was contended by the
105
The Competition Commission of india, Case No.61/2010 , date
8/2/13
106
https://en.wikipedia.org/wiki/India_national_cricket_team_reco
rd_by_opponent visited on 19/02/17
22
BCCI that it is a not-for-profit society for the
promotion of sport of cricket and its activities are
outside the purview of the Act, especially Section 3107
and 4108. It was also further submitted by the BCCI that
its commitments are neither driven by nor conditional
upon commercial considerations. Strictly going by the
main objectives of the BCCI and its contentions above,
it can be argued and established that the BCCI cannot
be considered as an enterprise for the purpose of the
Act.
Third aspect: comparison with a mirror case or
similar sounding case (Hemant Sharma vs Union
Of India)109:-
However the CCI cited the matter of Hemant Sharma
vs. Union of India110, in which the Delhi High Court had
held that
the All India Chess Federation, a similar entity which
was a regulator and organizer of a sport in the
country, was to be considered as an enterprise within
the meaning of the Act.
The CCI further observed that
"The activities of BCCI center both on custodian and
organizer role. In this broad based objective, BCCI is
involved in the selection of Team India to represent
India in international events, to work for development
of cricket by arranging training camps etc., as well as
organizing the game. These activities fall under the
custodian function of BCCI, however, the aspect of
organization brings in activities contributing to the
revenues of BCCI such as grant of media rights, sale
of tickets etc. The activities of organizing events are
definitely economic activities as there is revenue
dimension to the organizational activities of BCCI.
107
Competition Act, 2002 view here
https://indiankanoon.org/doc/1153878/ visted on 19/02/17
108
i.d., https://indiankanoon.org/doc/1780194/ visited on
19/02/17
109
Hemant Sharma And Ors vs Union Of India And Ors on 4
November, WP(C) 5770 2011
110
, WP(C) 5770 2011
Thus, it is conclusive that all Sports Associations are
to be regarded as an enterprise in so far as their
entrepreneurial conduct is concerned and treated at
par with other business establishments.111"
Thus CCI Concluded that since BCCI is engaged in
revenue generating activities, it has to be considered
an enterprise for the purpose of the Act.
It is submitted that the classification of BCCI as an
enterprise can be disputed based on the reading of
the term under the Act. While the CCI has clearly laid
down its reasons for concluding that the BCCI is an
enterprise, it must be noted that the plain reading of
the definition of the term enterprise indicates that
for an entity to be considered as an enterprise, it is
required to be engaged in the activities specified
under the definition of the term or engaged in the
provision of services of any kind, or in investment, or
in the business of acquiring, holding, underwriting or
dealing with shares, debentures or other securities of
any other body corporate. It is evident that the BCCI is
not engaged in any of the above mentioned activities.
The CCI in its decision has stressed on the commercial
nature of the activities of the BCCI. It has observed
that since the BCCI conducts activities that contribute
to its revenue, it can be classified as enterprise.
However it seems to have disregarded that the
definition of the term enterprise focuses on the
functional aspects of an entity. The definition in its
present form does not take into account factors
regarding revenue generation and commercial
purpose of an entity. The CCI has relied on the fact
that there is revenue/economic dimension to the
entity in this case (BCCI) and on that basis concluded
that it is an enterprise.
Last aspect: Abuse of dominant position of BCCI
under CCI Act 2002
111
Apurv Sardeshmukh, Abuse of Dominant Position By the
BCCCI-CCI decision, Indian law Journal, Can be viewed here
http://www.indialawjournal.org/archives/volume6/issue_1/arti
cle5.html visited on 19/02/17
23
As soon it was established the fact by CCI that BCCI
was an enterprise for the allegation of the Act section
4(2) and the next crucial question was whether the
BCCI was abusing its dominant position in its relevant
market.
The explanation to Section 4 provides that an entity is
in a dominant position if it enjoys a position of
strength which allows it to operate independently of
competitive forces prevailing in the relevant market
or affect its competitors or consumers or the relevant
market in its favour. As also indicated by the CCI in its
order, in order to asses a dominant position, it is first
important to identify the exact relevant market. The
Act defines relevant market as
"the market which may be determined by the
Commission with reference to the relevant product
market or the relevant geographic market or with
reference to both the markets."
Hence, the Act has given the discretion to the CCI to
determine in each case what constitutes a relevant
market. For the purpose of this case, the CCI, after
considering various factors concluded that the
relevant market was the Organization of Private
Professional Cricket Leagues/Events in India. Also in
view of the fact that the BCCI is the organizer and
regulator of cricket in India and also that any private
profession league requires prior approval of BCCI as
per the International Cricket Council regulations,
The CCI concluded that the BBCI was In a Dominant
Position In the relevant Market112 .
The CCI held that the most significant source of
dominance is the regulatory powers of the BCCI.
Further the CCI contended that since most of the
infrastructure with respect to cricket was owned by
the BCCI, they were in a position to dominate.
112
Apurv Sardeshmukh, Abuse of Dominant Position By the
BCCCI-CCI decision, Indian law Journal, Can be viewed here
http://www.indialawjournal.org/archives/volume6/issue_1/arti
cle5.html visited on 19/02/17
Dominance also stemmed from the role of BCCI as an
organizer of First Class/International Cricket events.
Thus, owing to regulatory role, monopoly status,
control over infrastructure, control over players,
ability to control entry of other leagues, historical
evidences, BCCI was concluded to be in a dominant
position in the market for organizing private
professional league cricket events in India 113 .
The CCI concluded that the BCCI had used its dominant
position in the market to sabotage the Indian Cricket
League (ICL), depriving it of infrastructure and
suspending players who participated in the ICL from
its activities. This according to the CCI amounted to
abuse of dominant position.
The CCI ruled that the BCCI has abused its
Dominant Position in the relevant market and
slapped a fine of Rs. 52.24 crores.
This is an interesting conclusion from the CCI. By the
very nature of the functions that they perform,
regulators need to be in a dominating position. It must
be noted that the BCCI is the regulator in the country
for the game of cricket. Some the powers that they
exercise like owning infrastructure, approvals of
leagues, tournaments etc come with domain of being a
regulator. In its order the CCI itself has admitted this
by stating
"The Commission takes cognizance of the pyramid
structure and notes that monopoly of sports
federations is a natural outcome of the structure".114
Also as per ICC regulation, any cricket
match/tournament to be conducted in India requires
the prior approval of the BCCI.
113
Ms. Isha Agarwal et al, Competition Laws in India and the role
of the watchdog CCI in maintaining healthy business competition
environment in the subcontinentcan be viewed here
http://www.slideshare.net/kannankarthik2009/law-assignment-
competition-commision visited on 19/02/17
114
Sh. Surinder Singh barmi v BCCI, can be visited on
https://indiankanoon.org/doc/77844337/ visited on 19/02/17
24
Hence, the power of the BBCI of approving or not
recognizing a cricket tournament stems from the ICC,
the global governing body of cricket. According to the
CCI by explicitly agreeing not to sanction any
competitive league during the currency of a media
rights agreement that the BCCI had entered into, the
BCCI has used its regulatory powers in restricting
competition. This according to the CCI was violation of
Section 4(2) (c)115 of the Act. It can however be argued
that the BCCI refused to recognize a competing event
since that can lead to the erosion of the authority of
the BCCI as a regulator and promoter of the game of
cricket in India. It can be argued that this is not an
abuse of its position as a regulator but a step taken to
protect the interest of the game of cricket116.

So, as fare as the BCCI concerned with the abuse of its

dominant position under CCI Act 2002 of section 4(2)
(c), that the CCI had directed it to "cease and desist"
from any practice in future that denies market access
to potential competitors. The order had followed a
complaint filed by an individual against BCCI way back
in November 2010.

BCCI later challenged the CCI's directive before

Competition, which has now set aside this order and
remitted the case to the Commission "for fresh
disposal".

115
Competition Act, 2002 view here
https://indiankanoon.org/doc/958762/ visited on 19/02/17
116
Ms. Isha Agarwal et al, Competition Laws in India and the role
of the watchdog CCI in maintaining healthy business competition
environment in the subcontinentcan be viewed here
http://www.slideshare.net/kannankarthik2009/law-assignment-
competition-commision visited on 19/02/17

25