Abuse of dominance

Abuse of dominance

Subject: Economy

Context:

The Competition Commission of India (CCI) has fined Google twice — for abusing its dominant position in the market with its Android mobile operating system (OS) and for anti-competitive policies in its in-app billing and payment processing.

Concept:

• Section 4 of the Competition Act prohibits abuse of the dominant position of an enterprise in the market.
  • Dominant position means a position of strength, enjoyed by an enterprise in the relevant market in India which enables it to:
    • Operate independently of competitive forces in relevant market
    • Affect competitors, consumers or relevant market in its favour
• Section 4(2) of Act prevents following acts resulting in abuse of dominant position:
  • directly or indirectly imposes unfair or discriminatory conditions or prices in the purchase or sale of goods or services;
  • restricts or limits production of goods or services in the market; etc.
  • if any enterprise indulges in a practice resulting in denial of market access in any manner.
• Factors to determine the dominant position–Section 19(4) of the Act gives a detailed list of elements that the Commission will consider while asking into any claim of abuse of dominance.
  • a market share.
  • the size and assets of the undertaking.
  • size and significance of contenders or competitors.
  • the financial intensity of the undertaking.
  • a vertical combination or integration.
  • a reliance on customers on the undertaking or undertaking.
  • degree of section and exit barriers in the market.
  • countervailing purchasing power.
  • market structure and size of the market.
  • a source of dominant position viz. regardless of whether acquired because of resolution or statute and so on.
  • social expenses and commitments and commitment of big business getting a charge out of the prevailing situation to financial improvement.
    • The Competition Commission of India is additionally approved to consider whatever other factors which it might think about applicability for the assurance of dominance.
• Powers on CCI –when the abuse of dominant position has been built up, the competition specialists can take certain measures for the same:
  • A restraining order.
  • The penalty which might be 10% of yearly turnover.
  • Direct the enterprise to make a move which the authority regards fit.
  • Give any other request which it might think fit.
  • Divide the prevailing endeavor.
  • In the instance of allure to the Competition Appellate Tribunal, the Tribunal may arrange for payment to the party bearing misfortune.
• Under Section 27 of the Competition Act, the CCI has power to impose such a penalty, as it may deem fit, which shall be not more than 10% of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse.
  • The Supreme Court in 2014 had ruled that the penalty should be imposed not on the “total/ entire turnover of the offending company” but on “relevant turnover.”