Abuse of Dominance
- March 26, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Abuse of Dominance
The Competition Commission of India (CCI) has ordered a probe into a complaint of abuse of dominant position by Google in their news referral and related advertisement service which is a violation of Section 4 of the Competition Act, 2002
The newspaper society also alleged that the publishers of news were not being paid a fair value for the content they produced and put out on their digital platforms and by advertising.
|Section 4 of Competition Act 2002|
(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.
Misuse of monopolistic powers by the big companies and gain large profit share by eliminating competition due to
- Network effect: Due to strong network effects, it is not possible to ban or curtail these services.
- Brand Loyalty: The major players have harnessed technologies that permit synchronicity between devices and people in a manner that is often superficially described as “brand loyalty.”
- Tying or Bundling Certain Products: Big tech firms have pre-loaded certain software with the OS. Due to this, many times, there was no option available to users to use other alternatives.
- Unfair Competition: Innovations and technological advancements have meant that unlikely giants have emerged in an extremely short span of time. To retain their pole position, these firms may resort to anti-competitive behavior. For example:
- Entry barriers
- Favouring few sellers on their platforms
- High advertising revenue and not paying newspapers for their contents
- Exclusive arrangements and cartelization.
- Privacy Concerns: Big tech firms’ market power is built at individuals’ expense through the unscrupulous collection and processing of user data and forcing certain products on consumers.
- Slow Regulation: Due to rapid innovation and advancement by the Big Tech firms, the regulators are only able to react, not be in readiness.
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.