Abuse of Dominant Position and related news

Abuse of Dominant Position and related news

Subject: Economy

Context:

The Competition Commission of India (CCI) imposed a penalty of Rs 1,337.76 crore on Google for abusing its dominant position.

Details:

• Mandatory pre-installation of the entire Google Mobile Suite (GMS) under Mobile Application Distribution Agreement (MADA), with no option to uninstall the same, and their prominent placement amounts to contravention of Section 4(2)(d) of the Act.
  • Section 4 of the Competition Act pertains to abuse of dominant position.
• Google has also leveraged its dominant position in the app store market to enter and  protect its position in Online Video Hosting Platforms (OVHPs) market through YouTube

Concept:

Android:

• It  is an open-source, mobile operating system installed by Original Equipment Manufacturers (OEMs) of smartphones and tablets.
• Android is developed by a consortium of developers known as the Open Handset Alliance and commercially sponsored by Google.

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,—
   1. directly or indirectly, imposes unfair or discriminatory—
      1. condition in purchase or sale of goods or services; or
      2. price in purchase or sale (including predatory price) of goods or service;
   2. limits or restricts—
      1. production of goods or provision of services or market therefor; or
      2. technical or scientific development relating to goods or services to the prejudice of consumers; or
      3. indulges in practice or practices resulting in denial of market access; or
      4. 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
      5. uses its dominant position in one relevant market to enter into, or protect, another relevant market.

Dominant position means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to—

1. operate independently of competitive forces prevailing in the relevant market; or
2. affect its competitors or consumers or the relevant market in its favour.

The network effect

• It  is a phenomenon whereby increased numbers of people or participants improve the value of a good or service.
• Example- The internet is an example of the network effect. As more users gained access to the internet, they produced more content, information, and services which in turn  attracted more users to connect and do business with each other.
• Congestion is a negative network effect whereby too many users can slow a network down, reducing its utility and frustrating network members.