Abuse of Dominance

(1) No enterprise shall abuse its dominant position.

(2) There shall be an abuse of dominant position under sub-section (1), if an enterprise,—

(a) directly or indirectly, imposes unfair or discriminatory—

(i) condition in purchase or sale of goods or services; or

(ii) price in purchase or sale (including predatory price) of goods or service; or Explanation.—For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or services referred to in sub-clause (i) and unfair or discriminatory price in purchase or sale of goods (including predatory price) or service referred to in sub-clause (ii) shall not include such discriminatory conditions or prices which may be adopted to meet the competition; or

(b) limits or restricts—

(i) production of goods or provision of services or market therefor; or

(ii) technical or scientific development relating to goods or services to the prejudice of consumers; or

(c) indulges in practice or practices resulting in denial of market access; or

(d) makes 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; or

(e) uses its dominant position in one relevant market to enter into, or protect, another relevant market. Explanation .—For the purposes of this section, the expression—

(a) “dominant position” means 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 favour;

(b) “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.

A monopoly is a market structure that consists of a single seller who has exclusive control over a commodity or service.

The word mono means single or one and the prefix pole in finds its roots in Greek, meaning “to sell”. Hence, the word monopoly literally translates to single seller.

Characteristics 

• Single seller – A single seller has total control over the production, and selling of a specific offering. This also means that the seller has no competition and holds the entire market share of the offering that it deals in.
• No close substitutes – The monopolist produces a product or service that has no similar or close substitute.
• Barriers to entry – In a monopoly market structure, new firms cannot enter the industry due to barriers like government regulations, contracts, insurmountable costs of production, etc.
• Price maker – A monopolist has the power to charge any price for its product of service.

Types

• Private Monopoly – A private monopoly is one that is owned by an individual or a group of individuals. These monopolies mainly aim for profits.
• Public Monopoly – A public monopoly is one that is owned by the government. These monopolies are set up for the welfare of the masses. An example of a public monopoly would be the U. S. Postal Service.
• Pure/ Absolute Monopoly – The monopolist controls the entire market supply for its product without facing any form of competition. This is possible because there is absolutely no close or remote substitute available in the market.
• Imperfect Monopoly – The monopolist controls the entire market supply for its product as there is no close substitute, but there is a remote substitute for the product available in the market.
• Simple Monopoly – A simple monopoly is one in which a single seller sells its product or service for a single price. There is no price discrimination in a simple monopoly.
• Discriminating Monopoly – A discriminating monopoly is one where a single seller does not sell his product or service for a single price. Price discrimination is witnessed wherein prices may vary from region to region, or people coming from different economic backgrounds may be charged a different price, etc.
• Legal Monopoly – A legal monopolist enjoys government approved rights like trademark, patent, copyright, etc.
• Natural Monopoly – A natural monopolist enjoys or benefits from natural factors like locational advantages, locational reputation, natural talents and skill sets of the producers, etc.
• Technological Monopoly – When a firm holds a technologically superior position that other firms cannot compete with, the firm is said to be a technological monopoly.
• Joint Monopoly – When two or more firms join hands in order to form a monopoly, it is referred to as a joint or a shared monopoly.