An Overview Of Regulations Of Abuse Of Dominant Position Under Competition Act

Author: LawSphereX

Category: Competition Law

Published: 2026-08-23T17:56:03.964959+00:00

Updated: 2026-08-26T17:12:13.867+00:00

AN OVERVIEW OF REGULATIONS OF ABUSE OF

DOMINANT POSITION UNDER COMPETITION ACT

N Nikhil Teja, BA.LLB, LLM, Karnataka State Law University

1. Introduction:

General competitive markets, the presence of multiple firms ensures that no single entity can unilaterally dictate market conditions, such as pricing, supply, or quality of goods and services. However, when a set of organizations attains leading position, it can disturb this balance by exercising disproportionate market power.1 The concept of dominant position is active in competition law, it highlights fine line between healthy market leadership and harmful market control. While dominance itself is not prohibited, the potential for abuse necessitates close monitoring and regulation to prevent actions that could stifle competition and harm consumers.

1.1. Dominant Position:

A dominant position denotes the facility of companies to operate with large degree of autonomy

in marketplace, usually because such a firm has huge market shares, is in a superior financial position, or has commanding control over resources. Dominance thus enables an organization to have substantial effect over the market’s, often at expense of effective competition2. The said concept is frequently judged on a number of issues, including: Dominance can be assumed for firm with maximum market portion, particularly if that share is way above rivals. High entry barriers to entry, whether in terms of capital investment, ownership of essential facilities, or access to raw materials, may cause a dominant position of the firm by deterring original applicants in the markets. The relationship of firm with its customers also comes into play. If customers have few choices,

1 Abuse Of Dominance Under the Competition Act: The Need for A Competitive Effects Test, Volume Vi

Mr. Aditya Bhattacharjea, 2019, Indian Competition Law Review. (ICLR) 2 This definition is similar to the definition given by the European Court of Justice in United Brands Co. v. B.C. Commission, case 27/76, (1978) ECR 207.

the firm is stronger place to order prices and sale, the number and strength of competitors come into consideration. If there are a few competitors to a market, a firm is added probable to adore a leading position. It may also be the case that companies that are vertically integrated controlling a number of successive steps of production or distribution might be more dominant, since it allows them to have greater overall control of the supply chain. In competition law, a dominant firm is one that can act independently of competitive pressures, allowing it to conduct an action that may restrict competition.

3 For example, Europe Commission describes dominance as "position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, customers, and ultimately of its consumers. " The importance of determining dominant place lies in possibility of abuse. Such practices may hurt not only competitors but also consumers, running the gamut from predatory pricing and exclusive dealing to refusal to supply essential goods or services. Consumer harm could manifest itself in developed values, reduced innovation, & lower value.

This is one of the reasons whereby, all over the world, including in India, competition laws like the Competition Act, 2002, have rigid provisions against monitoring and preventing any abuse of dominant position or abusive dominance. For instance, it allows for the C. C. I to inspects & decide cases relating the abuse of dominant position under Competition Act, 2002. This also includes unfair prices for products, limiting production, or creating entry barriers. It is expected that the law shall maintain competitive markets, ensuring that firms in possession of important market power don't exploit their position at the expense of consumers and the economy as a whole. Although the dominant position is not illegal per se, it is one of the most important focuses of competition law due to its potential for distorting market competition.

It is to ensure that a dominant firm shall not indulge in such practices that unfairly restrict competition and hence safeguarding consumer welfare and ensuring a healthy, competitive marketplace.

3 Competition Act, 2002. Section 4

Dominant position occurs when a company or group of companies holds a significant position and involves in practices that limit competition, exploit consumers, or stifle innovation. Competition law seeks to prevent such behaviour to maintain a fair and competitive marketplace. A company is considered dominant when it possesses substantial market control, allowing to operate separately of contestants or customers. This section aims to stop enterprises from interesting in practices that could harm rivalry in marketplace. The distinction between exclusionary and exploitative abuses is essential for understanding how dominant firms can potentially misuse their market power.

Exclusionary abuses refer to practices that aim to eliminate competitors in markets, while unfair abuses involve unfair practices directed at consumers, such as charging excessively high values or imposing partial trading circumstances.

1.2. Abuse of Dominant Position:

Abuse of dominant position happens once a firm with important market power involves in conduct that troubles competition4, deals specifically by the abuse of position. The key objectives of this section are to prevent practices that: Exploit consumers unfairly, Delay the entry or growth of competitors in the market.5 Indian Constitution, while guaranteeing the right to practice any profession, also recognizes the state's role in regulating economic activities. This dual responsibility is obvious in: Guarantees the right to practice any career6, Empowers the state to make laws regarding state monopolies,7

4 Competition Act, 2002. Section 4

5 Inserted by the Competition (Amendment) Act, 2007, w.e.f. 20-5-2009.

6 Article 19(1)(g): of Indian Constitution.

7 Article 19(6)(ii): of Indian Constitution.

Directs the states to prevent the attention of capital and manufacture8. A competitive market environment fosters innovation, efficiency, and economic growth; by

preventing market distortions, competition law helps to safeguard the benefits of economic growth. The Competition Commission of India stated that simply existence in dominant position in a market is not against the law under the Act. It is misuse of that supremacy that is prohibited by law. Relevant market is an important concept in competition law, defines the market in which a firm operates. It encompasses both the produce and the physical markets9. The relevant market is crucial for assessing market power and determining whether a firm holds a dominant position. The product market encompasses all goods that consumers view as identical, based on factors like structures, price usage. 10 For example, if two products serve the same purpose and can be substituted for one another, they fit to the identical products.

The geographic market refers to the part in firm competes and where consumers can reasonably switch to alternative suppliers. The geographic market can vary from local to national or even international, accountable of the creations11.

2. CCI Determination of Abuse of Dominant Position:

A firm is to be in a leading position, if it has significant market power, allowing it to function

self-sufficiently in market pressures. CCI evaluates the share, the capability to influence prices, and barriers to entry when

determining dominance. The CCI examines whether a dominant firm has engaged in conduct that harms competition or

8 Article 39(c): of Indian Constitution.

9 S. Chakravarthy, "Relevant Market in Competition Case Analysis", available a

http://circ.in/pdf/relevant_market-in-competition-case-analyses.pdf last visited on October 15, 2018.

10 Competition law, 2002, Section 2(t).

11 Competition law, 2002, Section 2(s).

consumers. This involves analysing the specific behaviours listed in S.4 of the Competition Act, which includes: • One-sided pricing; • Restraining production (o)r technical development; • Indulging in predatory pricing; • Imposing unfair conditions in contracts. While Section 4 outlines certain behaviours as abusive per se, the CCI has been affecting to approach in its decisional practice. The CCI reviews specific cases to determine whether the conduct in question constitutes an abuse of position. it involves a detailed analysis of market context, nature of the behaviour, and its impacts on competition. CCI may also consider any justifications provided by the dominant firm for its conduct. If the

CCI finds that a firm has abused its dominant position, it can impose penalties, issue cease and

desist orders, and require the firm to modify its conduct. The CCI aims to safeguard the competition is preserved in market and consumers are protected from exploitative practices. The section prohibits enterprises from indulging in practices that are deemed to be abusive. The practices outlined under this section include: Imposing unfair conditions on the buying or auction of goods and services or pricing practices, with valuation. Restricting production, supply, in a way that harms consumers and denying access to a market. In the Together we Fight Society case;12 Together We Fight Society filed a case against Apple Inc. and Apple India Pvt. Ltd. alleging that Apple's practices concerning data privacy and the terms and conditions of their products and services violated Indian consumer protection laws.

The plaintiff claimed that Apple’s data collection and privacy practices were invasive and not in compliance with Indian laws. It was alleged that Apple’s terms and conditions for its products and services were unfair and heavily tilted in-favour of the corporation, putting 12 Together We Fight Society v. Apple Inc. & Anr. , Consumer Case No. 79 of 2021 (NCDRC Aug. 25, 2021).

consumers disadvantage. it remained on the argument that Apple's practices infringed on the rights provided to consumers under Indian laws. The NGO sought legal intervention to ensure Apple modifies its data privacy policies to comply with Indian laws and makes its terms and conditions more consumer-friendly. The Issues raised, Whether Apple’s data privacy practices violated Indian privacy laws, Whether the terms and conditions imposed by Apple were unfair and against consumer protection laws in India. The court examined the data privacy policies of Apple and its compliance with Indian laws, including the Information Technology Act, 2000, and related rules. The court also scrutinized Apple's terms and conditions to assess their fairness in the C. P. Act, 2019.

The court ruled certain aspects of Apple’s data privacy policy were not in full compliance with Indian standards. It directed Apple to revise its privacy policies to ensure better transparency and user consent. The court found some of Apple's terms and conditions to be excessively one-sided and directed the company to make modifications to enhance consumer rights protection. It emphasized the need for companies to provide clearer and more accessible information about terms and conditions to consumers. The judgment was a landmark decision emphasizing the protection of consumer rights in the digital age. The court ordered Apple to comply with the changes within a stipulated time frame and also imposed a penalty for non-compliance with existing consumer protection laws.

3. Types of Abuse:

Abuse of dominance can be categorized into two main categories: Exploitative Abuse: This occurs when a leading organisation directly harms consumers, often through excessive pricing, unfair trading conditions, or limiting production. The goal is to exploit consumers' dependence on the firm due to lack of competition. Exclusionary abuse refers to practices designed to push competitors out of the market, such as exclusive dealing, or refusal to supply. The objective is to eliminate competition and maintain or strengthen the dominant position.

Enforcement and Investigation: The CCI is tasked with implementing the regulations concerning abuse of dominance. According to S.19 of the Act, the CCI has the authority to investigate supposed violations of S.4, determining whether a company has misused its dominant position13. In making its assessment, the CCI considers several factors, including the enterprise's market share, its size and resources, the economic strength and position of its competitors, the level of consumer dependence on the enterprise, and the presence of entry barriers in relevant market.

4. Punishment:

When a company is discovered to have abused its dominant market power, the Competition Commission may take various remedial actions to address the anti-competitive conduct and bring back fairness in the market. These are some of the things that can be done by the commission: Cease-and-desist Orders: The firm may be required to stop any abusive practices by way of orders by the commission. The purpose behind this is terminating ongoing anticompetitive conducts and preventing further harm to competition environment14. Divestiture: Acquisition or merger related abuse of dominance may require commissioning of specific divestitures or undoing of mergers. This measure aims at reinstating competitive balance and creating an even playing field in the market.

15 Structural Remedies: Such remedies could include for instance separation of divisions within the business or creating independent corporate entities. They change company structure so as to decrease its dominance, increase competition within it. Behavioural Remedies: These represent imposing certain behavioural requirements on a company like constraining prices, outputs or market practices. It is an effort towards changing firm behaviour so that it complies with competition norms. 13 Demystifying the Competition Implications of “Abuse of Dominance” (Concept and Compliances), Divyesh Patel, FCS, 2023, www. icsi. com

14 Competition Act, 2002, Section 27(a)

15 Competition Act, 2002, Section 5.

The abuse of dominant position in the market can attract very serious penalties. In addition to the maximum penalty of up to 10%, computed as a proportion of its average turnover for the previous three financial years, the company may be issued with a cease-and-desist order by the CCI requiring it to immediately discontinue anti-competitive conduct16.

Moreover, the CCI may order divestiture, forcing the company to sell some assets or business divisions to reduce its dominance or even break up the firm to reduce its power in the market. Apart from such sanctions, the CCI may endorse to the government further action to be taken in the form of, inter alia, legislative changes or changes in regulations, so that the continuance of an abusive dominant position is also restricted. In Shri Neeraj Malhotra case17; Shri Neeraj Malhotra, an advocate, file a complaint with the CCI against Delhi Ltd., BSES. Power. Ltd., BSES. Yamuna Ltd., alleging that these entities

were engaging in anti-competitive practices. The complaint was filed under S. 19(1)(a) the Act, claiming abuse of position in the transfer electricity in Delhi, the complainant alleged that the electricity distribution companies had imposed unfair circumstances in sale of electricity to consumers. It was suspected that discoms had harmed their position by levying extreme and unjustifiable charges, such as late payment surcharges and meter testing fees, which amounted to exploitation of consumers. The judgment emphasized consumer rights and protection against exploitative practices by dominant firms. It provided clarity on what constitutes abuse of dominance, especially in monopoly markets like utilities, where consumers have limited alternatives. The case highlighted the CCI's role in regulating markets to safeguard fair practices, avoid abuse by the enterprises.

This case set a precedent for how the CCI would handle similar cases of alleged abuse of position in future, establishing a framework for assessment and enforcement.

16 Inserted by the Competition (Amendment) Act, 2007, w.e.f. 20-5-2009.

17 Shri Neeraj Malhotra, Advocate v. North Delhi Power Ltd. & Ors; Case No. 06 of 2009, CCI (India), Nov. 30, 2011.

In the Ajay Devgn Films case18; Ajay Films filed a complaint against Yash Films Pvt. Ltd. in the CCI alleging unfair works. The dispute arose connection with the release of Ajay movies “Son of Sardar" & Yash Pictures' "Jab Tak Hai Jaan," both scheduled to release on Diwali 2012. Ajay Devgn Films claimed that Yash Raj Films was abusing the place in market to block screen for "Jab Tak Hai Jaan" by coercing exhibitors to dedicate more screens to their film at the expense of "Son of Sardar. " The Issues raised, Whether Yash Raj Films involved in anti-competitive practices in the market and preventing fair competition. The CCI ruled in favour of Yash Raj Films, dismissing the complaint filed by Ajay Devgn Films. The Commission found no evidence to support the claim that Yash Films had harmed its leading position or engaged in unfair trade practices.

The CCI concluded that the agreements Yash Raj Films had with exhibitors were within legal and competitive norms and did not violate any provisions of the Act. C. C. I' s decision emphasized the importance of competitive practices and clarified that merely having significant market influence does not automatically equate to anti-competitive behaviour.

5. Conclusion

The study of abuse of a dominant position under the Competition Act, 2002 encompasses the fundamental role of regulatory forms in securing competitive markets and protecting consumer interests. Dominant market power, while not inherently illegal is immensely dangerous if misapplied. Therefore, the Competition Commission of India (CCI) ensures through the provisions under Section 4 of the Competition Act that there is fair play in the forms of markets that exist, fostering the creativity for consumers as well as preventing the exploitation of consumers or the exclusion of competitors. This study emphasizes the need to study market power based on market share, barriers to entry, and the ability of the firm in acting

18 AJAY DEVGN FILMS VS. YASH RAJ FILMS PVT. LTD. & ORS; COMPETITION COMMISSION OF

INDIA Case No. 66 of 2012 Dated: 05/11/2012

independently of the competitive pressures. Cases that are reviewed exemplify how CCI has walked that tightrope of market influence and providing legal implications, further underlining that dominance becomes problematic only when used in order to distort competition This study emphasizes the need to study market power based on market share, barriers to entry, and the ability of the firm in acting independently of the competitive pressures. Cases that are reviewed exemplify how CCI has walked that tightrope of market influence and providing legal implications, further underlining that dominance becomes problematic only when used in order to distort competition. The goal of the CCI is to restore competitive equilibrium through penalties, structural changes, or behavioural changes in the implementation of remedies.

This does not only uphold the interest of the consumer but also enables competition purely on merit among business players, creating a dynamic and innovation-oriented marketplace. This study's findings reinforce the need for incessant regulatory intervention in dealing with the dynamic challenges of a dominant market power. As markets expand and diversify, particularly under the digital age, CCI's role continues to evolve in terms of meeting the emerging complexities while adhering to the principles of fair competition. This structure advances India's economic development as well as positions its markets as fair, innovative, and resilient.