Dr.

KUMUDHA RATHNA

THE COMPETITION LAW

INTRODUCTION:

GENESIS: The Govt. decided to liberalize its economic policy in 1991

because of the financial crisis & opened up its economy to the
international market, inviting private investment, i.e., LPG. Due to this it
had to fulfil obligations under World Trade Organization (WTO), General
Agreement on Tariffs & Trade (GATT), Trade Related Aspects of
Intellectual Property Rights (TRIPS) etc.

MRTP Act, 1969 was enacted mainly to contain the concentration of

economic power & therefore wasn’t suited to deal with issues relating to
preservation & protection of competition, in the new business
environment.

Also, as certain provisions in the MRTP Act (Monopolies & Restrictive

Trade Practices Act) were obstructive to private investment, they were
deleted. (Eg: Prior approval of the Govt. for enterprises slowed the
entry of foreign enterprises into India, consequently the provisions
dealing with monopolistic enterprises seeking prior approval were
deleted from the Statute). Only powers to Order division of undertaking
or to direct severance of inter-connection of undertakings were
retained, but these powers were never used. Thus the MRTP became a
toothless tiger.

In the wake of influx of large MNCs, on opening up of the economy of

the country & the enlargement of the range of goods/services offered to
the consumer-a specific Law for preserving competition became
essential.
Dr. KUMUDHA RATHNA
Also, all over the world, it was found that private monopolies can be
detrimental to national economy & control was required. Fair & free
competition is required for growth of a healthy economy.

The Central Govt. in 1999, appointed a high-level committee-The

Raghavan Committee (Mr. SVS Raghavan, a retd. Senior Govt. Officer)
on competition policy & Law, to study the 1) Indian economic scene & 2)
make recommendations for a competition policy to cope up with the
international economic developments, 3) to provide for a basic
legislation to meet the needs of the nation, pertaining to this aspect.

The TOR (Term of Reference) to the Raghavan Committee (RC) were as

follows:-

o Suitable legislative framework (in the light of international

developments) to meet the needs of promoting competition;

o Laws relating to mergers & demergers;

o Such legis framework could entail a new Law OR appropriate

amendments to the MRTP Act, 1969.

SALIENT FEATURES OF THE REPORT OF THE RAGHAVAN

COMMITTEE:

➢ The term ‘Competition’ has been used sparsely in the MRTP Act
(only in 2 places);

➢ Lack of precise definitions of crucial terms such as-dominance,

cartel, collusion, boycott, refusal to deal, bid rigging, predatory
pricing etc. These are necessary to effectively detect such
behaviour & impose sanctions against them. Lack of precise
definitions had led to different judicial interpretations, sometimes
contradictory.
Dr. KUMUDHA RATHNA
So, MRTPC (Monopolies & Restrictive Trade Practices
Commission) is constrained to fit anti-competitive behaviour into 1
or more of the provisions of the Law in the absence of precise
definitions.

➢ The term ‘Cartel’ not mentioned or defined in any section/clause.

➢ Existing Law inadequate to deal with implementation of the WTO

agreements.

➢ No merger control provisions. Committee recognized the

necessity of having specific merger control provisions at par with
other modern competition Laws.

➢ Provisions dealing with unfair trade practices overlap with similar

provisions in the Consumer Protection Act, 1986 & MRTP Act, 1969.

➢ Emphasised about anti-competitive practices as follows, ‘...the

MRTP Act, in comparison with Competition Laws of many
countries, is inadequate for fostering competition in the market &
trade & for reducing, if not eliminating, anti-competitive practices
in the country’s domestic & international trade.’

Thus, the RC declared the MRTP Act to be falling short of addressing

competition and anti-competitive practices.

SUGGESTION OF RC:

➢ Desired that the new Law focus on preventing anti-competitive

practise, ‘...the only legitimate goal of Competition Law is the
maximization of economic welfare.’

➢ Competition authority should be governed by established

competition principles.
Dr. KUMUDHA RATHNA
➢ There is to be a balance between over-intervention & exemption
from sanction in the name of ‘Public interest’.

➢ Essential to have merger control provisions in the new legislation.

But, suggested a soft approach, i.e., voluntary notification for
mergers.

➢ That government enterprises & departments should be brought

under the purview of Competition Law. Only exception-sovereign
functions of the government (Eg: Defence).

➢ Policy of purchase/price preference to government owned

enterprises was recommended to be discontinued. (This
recommendation was in spite of the fact that many countries
exempt government enterprises from purview of the Competition
Law).

➢ There should be no distinction between ultimate consumer &

intermediate consumer.

➢ While the Committee presumed some anti-competitive behaviour to

be injurious to competition, it recognized the primacy of rule of
reason test for the rest. The primacy of rule of reason test over per
se rule is universal among modern competition Laws; the latter
being invoked only against hard-core anti-competitive behaviour
(Eg: Cartelization).

➢ Suggested the setting up of a specialized agency to try competition

cases & opined that this is suitable in developing countries
(though, in many countries competition cases are tried by Courts).

➢ Recommended in detail regarding the admn setup of an

(i)independent & autonomous competition authority-stating that its
main objectives should be to (ii)administer the competition Law &
engage ‘proactively in Governmental policy
Dr. KUMUDHA RATHNA
formulation’ (proceedings shd be (iii)transparent). That the
authority shd be (iv)manned by experts in various fields who can
be removed only with the concurrence of the SC of India.
(v)Jurisdiction-shd be extra-territorial. (vi)Powers to-punish the
guilty & levy fines.

➢ Much emphasis on competition advocacy by competition authority

(Reason-lack of/low awareness of competition issues among
stakeholders).

➢ Need for a Competition Law Tribunal (CLT) (Competition

Commission of India-CCI) that will act as a watchdog for the
introduction & maintenance of competition policy.

➢ Emphasised the importance of co-ordination of different policy

measures of the Govt. for effective implementation of competition
policy.

➢ There should be progressive reduction & ultimate elimination of

reservation of products for the small-scale industries & the
handloom sector.

➢ Proposed legislation should cover all industries in the public &

private sector & professional services.

Based on its analysis, The RC found it more expedient to have a new

competition Law. This report formed the genesis of the modern
Competition Law, vide a Central Law, The Competition Act, 2002.

The Competition Law (i.e., Competition Act, 2002) was enacted in

January.2003-after taking into consideration the recommendations of
the (i)Raghavan Committee & deliberations of the (ii)Standing
Committee on Finance.
Dr. KUMUDHA RATHNA
The Act was introduced at a time when large MNCs were taking
advantage of India’s liberalized economic policy, permitting greater
participation of overseas companies in economic activities in India.
Indian industry, used to protection, belatedly recognized the gross
inequality between them & the MNCs-in terms of size & experience &
Govt. endeavoured to set up a level playing field by means of this
Enactment.

The progress of this Act was stymied thru BRAHM DUTT V. UOI filed in
the SC-challenging the authority of the Central Govt. to appoint the
Chairperson & member of the CCI (Qualification for the Chairperson-A
person of ability, integrity & standing who-(i)has been/is qualified to be
a Judge of HC or (ii)has spl knowledge of & professional experience of
not less than 15 yrs in international trade, economics, business,
commerce, Law, Finance, accountancy, management, industry, public
affairs, admn or in any other matter, which in the opinion of the C.Govt.
may be useful to the Commission).

Ground of Challenge-

a) CCI envisaged by the Act was more of a judicial body having

adjudicatory powers & applying the Doctrine of Separation of Powers
(recognized in the Indian Constitution)-the right to appoint the judicial
members of the Commission should rest with the Chief Justice (CJ) of
India or his nominee.

b)Chairman of the Commission shd necessarily be a retired CJ of SC/

HC-to be nominated by the CJ of India or by a Committee presided
over by the CJ of India.

c) Appointment of a civil servant, sans reference to the head of the

Judiciary was argued as being undesirable in Law, considering the
Dr. KUMUDHA RATHNA
purpose of the Act & the functions to be discharged by the
Competition Commission.

Central Government’s representation-

a) C.Govt. intended to make certain amendments to the Act carry into

effect the selection of the Chairperson & members of the Commission
by a Committee presided over by the CJ of India or his nominee.

b)Chairman of the Commission would be an expert in the field & that it

wasn’t necessary for him to be a Judge of the SC/HC.

SC was satisfied with the response of the C.Govt. & closed the WP on
Jan.2005 sans pronouncing on the issues raised & left open all
questions regarding the validity of the Enactment to be decided after
the amendments of the Act, if there came up any challenge to the
amended Act.

In the light of the Order of the SC, the C.Govt. introduced into
Parliament-the Competition (Amendment) Bill, 2006. The bill was
referred to the Parliamentary Standing Committee on Finance (2006-07)
& after taking into account its recommendations, the Competition
(Amendment) Bill, 2007 was introduced into Parliament & after approval
by both Houses, the Competition (Amendment) Act, 2007 received the
assent of the President on 24th.Sept.2007.

PRINCIPAL AMENDMENTS are as follows:

i. Composition of the Competition Commission;

ii. Selection Committee for Chairperson & members;

iii. Appointment of the Secretary/experts/officers & other employees of

the Commission;
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iv. Provision that a mandatory notice shall be given to the Commission
by any person/enterprise proposing to enter into a combination to
which the Act applies (previously the notice was optional);

v. Establishment of the Competition Appellate Tribunal (CAT)-(quasi-

judicial body);

vi. Its composition/selection of Chairperson & members/procedure for

appeals;

vii.Provision for appeal to the SC (against the Orders of the CAT);

viii.Repeal of the MRTP Act & dissolution of the MRTP Commission.

DISTINCTION BETWEEN MRTP ACT & COMPETITION ACT:

Sl.
MRTP ACT COMPETITION ACT
No.

1. Regarding problems of monopoly & Considers these issues as economic

anti-competitive practices from a issues to be dealt with from an economic
Legal perspective. viewpoint.
2. MRTP Commission was conceived Competition Commission conceived as a
as a quasi-judicial body, comprising regulatory body of experts in economic
of both judicial & non-judicial affairs looking at the issues from the
members (headed by a person who angle of their economic impact on
is/was a Justice of SC/HC). business etc.
3. C o m m i s s i o n w a s s i t t i n g a s No benches, as there will be no
Benches. complaint, but only information or
reference.
4. Hearings held of parties. No hearings, only meetings.
To ensure that Legal issues were also given importance, the Competition Appellate
Tribunal (CAT) was established with provision for a further appeal to SC. Thus,
Competition Act is an improvement on MRTP Act.

OBJECTIVES OF COMPETITION ACT:

Dr. KUMUDHA RATHNA
As per the Preamble to the Act -

1) Prevent practices having an adverse effect on competition;

2) Promote & sustain competition in markets;

3) Protect the interests of consumers;

4) Ensure freedom of trade carried on by other participants in markets in

India;

5) For dealing with matters connected therewith or incidental.

ANTI COMPETITIVE AGREEMENTS:

One of the objects of the Competition Act as stated in the Preamble is to

prevent practices having adverse effect/s on competition. The principal
objective of suppliers (of goods/services) who are in a position to
manipulate the market-is to maintain their profits at pre-determined
levels & ultimately reduce & eliminate competition.

Usual modes resorted towards achieving this end are-Egs: Agreements

for price-fixing, limiting supply of goods/services, dividing the market
etc.
DEFINITION OF TERMS:
1) AGREEMENT: [S.2(b)]:
(Includes)-any-arrangement, understanding, action-in concert (common
plan/together) -
a. Needn’t be a formal arrangement (Eg: Even a gentlemen’s ag
would come within the term ‘understanding’);
b. Needn’t be in writing;
c. Whether or not it is intended to be enforceable by Legal
proceedings.
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(Eg: The info forming the basis for action (against the cartel) may be
contained in minutes of meetings, memoranda, records of telephone
conversations, correspondence etc – CASE LAW-LOMBARD CLUB, Re).

Parties: could be-bet-(i)Enterprises; (ii)Association of enterprises;

(iii)Persons; (iv)Association of persons or (v)Combi of any of these
entities.
Subject Matter Of Agreement: Production, supply, distribution, storage,
acquisition, control of goods or provision of services.
Where these agreements cause or is likely to cause an appreciable
adverse effect on competition within India, it is prohibited [S.3(1)] &
declared void [S.3(2)].
FACTORS TO BE CONSIDERED (by the Commission) in determining
whether an ag has an appreciable adverse effect on competition shall
have due regard to all or any of the following factors: [S.19(3)]:
a) Creation of barriers to new entrants in the market;
b)Driving existing competitors out of the market;
c) Foreclosure of competition by hindering entry into the market;
d)Accrual (accumulating/increasing) of benefits to consumers;
e) Improvements in production/distribution of goods/provisions of
services;
f) Promotion of technical/scientific/economic developments by means
of production/distribution of goods/services.
2) CARTEL: [S.2 (c)]:
(Includes) An association of producers, distributors, sellers, traders,
service providers-who-by ag amongst themselves-limit, control/attempt
to control-production, distribution, sale, price of, trade in goods or
provision of services.
Cartel is a presumed anti-competitive agreement.
Effect:
o Restriction of competition;
Dr. KUMUDHA RATHNA
o Consequent loss of benefits to the consumer that an unhindered
market would’ve offered.
o Depending upon the size of the members of a cartel & the volume
of business they control, the harm they could cause to the
economy would be huge.
CASE LAW:
• MADRAS JEWELLERS & DIAMOND MERCHANTS’ ASSOCIATION,
Re –Trade Association asking its members not to sell below the
rates announced by it, with a threat of expulsion in the event of
non-compliance-HELD-It’s a cartel.
• DGIR v. MODI ALKALI –OBSEVATION-‘3 essential ingredients of
cartel are-(i)Parity of prices; (ii)Ag by way of concerted action
suggesting conspiracy; (iii)To gain monopoly/restrict/eliminate
competition’.
• SUMITOMO CORPN IN, Re –HELD-Cartelisation imposes unjustified
cost on consumers. Price fixing is illegal per se, therefore, further
enquiry on the issue of intent or the anti-competition effect is not
required.
• HARIDAS EXPORTS v. ALL INDIA FLOAT GLASS MFGRS
ASSOCIATION –HELD-Protecting inefficient industry is not ‘public
interest’ & in such cases ‘cartel’ is permissible-OBSERVATION-
MRTP Commission can’t pass an injunction for imports at
predatory prices-If the cartel is selling goods to India (at lower
prices) & still making profit, it will not be in the interest of general
body of consumers in India to prevent import of such goods. The
era of protectionalism is now coming to an end.
Expln: Meaning-predatory pricing: It’s the practice of selling a product/
service at a very low price, (i)intending to drive competitors out of the
market, or (ii)create barriers to entry for potential new competitors. If
competitors can’t sustain equal or lower prices without losing money,
 Dr. KUMUDHA RATHNA
they go out of business or choose not to enter the business. The
predatory merchant then has fewer competitors or is having monopoly
& can later raise the prices (to even supra competitive pricing level).
The predatory merchant undergoes short-term pain for long-term gain.
But, the predator would succeed in adopting this strategy only if it is
(i)substantially stronger than its competitors & when (ii)barriers to entry
are high, preventing new entrants from replacing others driven out,
thereby allowing supra competitive pricing to prevail long enough to
dwarf the initial loss.
Thus predatory pricing is a risk, may not always work out. Eg: (i) In U.S.
Herbert Dow Canadian born American chemical industrialist (founder of
Dow Chemical Company) not only found a cheaper way to produce
bromine (bromine extraction from bromide/brine using electrolysis) but
also defeated a predatory pricing attempt by the Govt. supported
German Cartel Bromkonvention which objected to his selling in
Germany at a lower price & retaliated by flooding the U.S. market with
below-cost bromine, at an even lower price than Dow’s. But, Dow
simply instructed his agents to buy up at the very low price 15c a piece
(well below its usual 49c & Dow’s 36c), compared to, then sell it back
repackaging it, in Germany and Europe at 27c (he withdrew totally from
the American market), a profit but still lower than Bromkonvention’s
price. In the end, the cartel couldn’t keep up selling below cost, and
had to give in. At reached was - B will withdraw from US market, D will
withdraw fromGermany, rest of the world was free for competition.
(ii) Alleged predatory pricing is – Microsoft released their web-browser
IE for free. As a result the market leader & primary competitor Netscape
was forced to release Netscape Navigator for free in order to stay in the
market. IE’s free inclusion in Windows led to it quickly becoming the
web browser used by most computer users.
3) ENTERPRISE: [S.2 (h)]:
• A person/dept of Govt.-who/which-
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• Is/has been engaged in any-activity relating to-
o production, storage, supply, distribution, acquisition or
control of article/goods/services (of any kind) OR-
o in investment OR
o in the business of-acquiring, holding, underwriting or dealing
with shares/debentures/other securities-
of a body corporate (directly/indirectly or thru 1 or more of its units,
divisions or subsidiaries)-
• Whether the enterprise & these units etc are located in the same or
different places.
DISCLUDES-Any activity of the Govt. related to sovereign functions of
the Govt. including all activities carried on by the depts. of the Central
Govt. dealing with atomic energy, currency, defence & space.
[Explns: Activity-includes-profession/occupation;
Article-includes-new article;
Services-includes-new services;
Unit/division-includes-plant/factory-established for-production, storage,
supply, distribution, acquisition, control-of any article, goods-any
branch/office/established for provision of any service.
Goods-as defined in the Sale of Goods Act, 1930 & includes-
• Products manufactured/processed/mined;
• Debentures/stocks/shares (after allotment);
• In relation to goods supplied, distributed or controlled in
India, goods imported into India].
No Exemption to: Public Sector Undertakings (PSU) & enterprises
controlled by Govt.
4) PERSON: [S.2 (l)]:
Includes-
• Individual;
• HUF;
• Company;
Dr. KUMUDHA RATHNA
• Firm;
• Association of persons or body of individuals (whether
incorporated or not in India or outside India);
• Any corpn established by/under any Central, State or Provincial
Act or Govt. Co. as defined in s.617 of the Companies Act, 1956;
(S.617: Where not less than 51% of the paid-up share capital of the
Co. is held by the C.Govt. or any S.Govt. or by both of them. Same
applies to corpns established by any Central, State, Provincial
Act.)
• Any body corporate incorporated by/under the Laws of a country
outside India;
• Co-operative society registered under any Law relating to co-
operative societies;
• Local authority;
• Every artificial juridical person (not comprised in any of the above
sub-clauses).
[Expln: As s.2(h) defines enterprise as including profession or
occupation-members of any profession would have to conform to the
provisions of the Competition Act.]
S.32: Empowers the Commission to inquire into anti-competitive acts
taking place outside India-but-having an effect on competition in India.
5) GOVERNMENT: [S.2(h)]:
A person/dept. of Govt.-engaged in the supply of goods/services.
INCLUDES – All economic activity other than the exceptions-carried on
by the Govt. or Govt. undertaking, PSU (by whatever names called).
EXCLUDES – (i)Any activity of the Govt. relatable to the sovereign
functions of the Govt.; (ii)Including all activities carried on by the depts.
of the C.Govt dealing with atomic energy, currency, defence & space.
6) PRICE: [S.2(o)]:
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INCLUDES-any form of valuable consideration (direct/indirect)-which in
effect relates to the sale of goods or to the performance of any services-
even though ostensibly relating to any other matter/thing.
If the parties agree-may be a deferred payment.
7) SERVICES: [S.2(u)]:
Of any description-made available to potential users (INCLUDES-
services in connection with business of any industrial/commercial
matters).
Eg: Banking, insurance, chit funds, real estate, storage, transport,
construction, advertising, conveying news/info, education, boarding,
lodging etc.
CASE LAW:
• TMA PAI FOUNDATION v. STATE OF KARNATAKA –HELD-
Education is a service. Even if there is any doubt about whether
education is a profession or not, it does fall within the meaning of
the expression.
• P.A. INAMDAR v. STATE OF MAHARASHTRA –HELD-Education
which is a useful activity & irrespective of whether for charity/
profit-is an occupation.
8) TRADE: [S.2(x)]:
Trade/business/industry/profession/occupation-relating to-production/
supply/distribution/storage/control of goods/services.
[Trade] PRACTICE (habitual/custom) [S.2(l)]: Practice relating to the
carrying on of any trade by a person/enterprise.
PERSUMED ANTI-COMPETITIVE PRACTICES: [S.3(3)]:
Any ag entered into between enterprises/associations of enterprises/
persons/associations of person/s & enterprise/s including cartels
(engaged in identical/similar trade of goods/services)-decision taken
which-
i. Directly/indirectly determines purchase/sale prices;
Dr. KUMUDHA RATHNA
ii. Limits/controls-production/supply/markets/tech development /
investment or provision of services;
iii. Shares the market or sources of production/services by way of-
allocation of geographical area of market/types of goods/ services/#
of customers in the market/any other similar way;
iv. Directly/indirectly results in bid rigging or collusive bidding
Shall be presumed to have an appreciable adverse effect on
competition.
EXCEPTION: Doesn’t apply to-Joint venture agreements-IF such ags
increase efficiency in production/supply/distribution/storage/
acquisition or control of goods/services.
Onus of proof: lies on the deft to prove that there isn’t any appreciable
adverse effect on competition.
PROHIBITION IF THE AGREEMENT AFFECTS COMPETITION: [S.3]:
HORIZONTAL (CARTELS) & VERTICAL RESTRAINTS:
VERTICAL RESTRAINTS:
Any agreement amongst enterprises/persons-at different stages or
levels of-the production chain in diff markets-in respect of production,
supply, distribution, storage, sale, price of, trade in-goods/services-
shall be an agreement in contravention of S.3(1)-IF such ag causes or is
likely to cause an appreciable adverse effect on competition in India
(i.e., by applying the rule of reason).
There could be other types of ags falling u/s.3(4) as those stated in the
sub-section are not exhaustive, i.e., gives an ‘inclusive’ definition of
each of the vertical restraints, meaning-there could be other vertical
restraints also.
(Simple) DEF: Where the parties (to the ag) are in diff stages/levels of
the production chain, this practice is called a vertical restraint.
WISCONSIN ELECTRIC CO v. DUMORE CO (OHIO) –OBSERVATION-‘The
equitable Doctrine of ‘Unfair Competition’ is not confined to cases of
Dr. KUMUDHA RATHNA
actual market competition between similar products of different parties,
but extends to all cases in which 1 party fraudulently seeks to sell his
goods as those of another.’
RELEVANT MARKET: [s.2(r)]:
The market which may be determined by the Commission with reference
to the relevant product market or the relevant geographic market or with
reference to both the markets.
TYPES:
RELEVANT GEOGRAPHIC MARKET: S.2(s): A market comprising the
area in which the conditions of competition for supply of goods or
provision of services or demand of goods/services are distinctly
homogeneous & can be distinguished from the conditions prevailing in
the neighbouring areas.
Eg: If customer preferences for a particular quality/price of the product
are different in a neighbouring area, the composition of the
geographical market is different in the 2 places & what shd be
considered as the relevant geographic market in that case is only the
area where the conditions of competition are homogeneous.
RELEVANT PRODUCT MARKET: S.2(t): A market comprising all those
products/services which are regarded as inter-changeable or
substitutable by the consumer, by reason of characteristics of the
products/services, their prices & intended use.
Eg: (Case Law – United States v. Du Pont & Co) Relevant market for
Cellophane is the market for flexible packaging materials, as cellophane
is interchangeable with numerous other materials, & is therefore a part
of the market for flexible packaging materials.
Quote regarding interchangeability-from above case –‘This
interchangeability is largely gauged by the purchase of competing
products for similar uses considering the price, characteristics &
adaptability of the competing commodities.’
 Dr. KUMUDHA RATHNA
If the effect of an agreement (includes-any arrangement, understanding
or action in concert) is such that it will significantly reduce the level of
competition existing at the time the agreement is given effect, the ag
may be stated as anti-competitive.
PRO-COMPETITIVE BENEFITS OF VERTICAL RESTRAINTS:
Sometimes, a vertical restraint, depending upon the structure of the
market for a product, may be shown to be pro-competitive without any
harm to the competitive process. The restraints may be necessary in
some situation to ensure that the sales support to the retailers extended
by the manufacturers may not be exploited by the free riders.
AGREEMENTS LIKELY TO ADVERSELY AFFECT COMPETITION:
A.RESTRICTIONS ON OUTPUT/SUPPLY: EXCLUSIVE DISTRIBUTION
AGREEMENT: [S.3(4)-Expln (c)]:

Agreements that limit/control-production, supply, markets, technical

development, investment or provision of services is a presumed anti-
competitive agreement if causes an appreciable adverse effect on
competition within India (S.3(1) and void (S.3(2)
As stated in the MRTP Act it means-Ags to restrict/with hold/limit-
output/supply of goods or allocate any market or area/s for the disposal
of goods.
CASE LAW:
• DGIR (Director General Of Investation & Registration) v. BAYER
(INDIA) LTD – Condition in ag with distributor that he will not make
supplies to chemists, Doctors & Govt. or private institutions even
though he accepts the order. Seller will sell directly to these
customers without any commission to the distributor-HELD-Anti-
competitive ag.
• DGIR v. TITAN INDUSTRIES –There was a clause in agreement with
franchisee that the franchisee will not deal in products/goods of a
Dr. KUMUDHA RATHNA
similar nature-for a period of 3 years from the date of determination of
ag within radius of 5 Kms from showroom-HELD-It is restrictive trade
practice.
• DGIR v. RAJSHREE CEMENT –HELD-An agreement containing the
clause that the dealer will concentrate on a particular area is
permissible if there is no prohibition on him from effecting sales in
other areas.
• DELHI CLOTH & GENERAL MILLS Co LTD; DGIR v. MODI INDUSTRIES
LTD; DG v. BHARAT COMMERCE & INDUSTRIES LTD; PIRAMAL
HEALTH CARE LTD, In Re –HELD-In ag with agents, restrictions as to
dealing in similar goods or as to territory-permissible-REASON-To
avoid unhealthy competition between agents.
B.TIE-IN-SALE: (or-Full line forcing): [S.3(4)-Expln (a)]:
Includes any ag requiring (compulsorily forcing) a purchaser of goods-
to purchase some other goods along with the goods he wishes to
purchase (as a condition of such purchase).
A product/service is to be treated as being the subject of a tie-in-
agreement-when its supply is offered on the condition that the buyer
who ordered for the product/service (the basic product) must also
purchase some other product/service.
The product/service required by the buyer is called-tying product.
The one that is forced on the buyer is called the-tied product/service.
Hence, the buyer is required (compelled) to buy also a product or
service he doesn’t need-thereby forced to incur unnecessary
expenditure.
But-under Competition Law-reasoning is different-it is objectionable on
the ground that it reduces competition in the supply of the tied product.
CASE LAW:
• In Re, R.P. ELECTRONICS –Asking customer to enter into service
contract while buying goods.
Dr. KUMUDHA RATHNA
• CHANAKYA & SIDDHARTA GAS Co, In Re –Requiring customer to buy
gas stove while giving gas connection.
• DGIR v. STATE BANK OF INDIA –Bank asking person to keep fixed
deposit with Bank while allotting him a locker (as there is direction of
RBI not to insist on bank deposit for locker).
• AMAR JEEVAN PUBLIC SCHOOL, In Re –School making it
compulsory to buy uniforms & books only from its own shop.
• UNITED RADIO & TELEVISION Co, In Re –Compelling customer who
is buying TV to also buy voltage stabiliser from the seller.
• KHANDELWAL PHOTOSTAT v. KORES INDIA LTD –Insisting on
service contract at the time of sale of goods.
• TCI, In Re –Not tie-in sales-egs: (a)Insistence by car manufacturer that,
during the warranty period, air-conditioner can be fitted to car only by
authorised dealer to ensure that improper air-conditioner doesn’t
affect performance of car during warranty; (b)Manufacturer requiring
distributors to maintain minimum quantity of spares for machinery &
equipment supplied by them-to ensure prompt service; (c)Transporter
charging additional amount for goods carried at carrier’s risk-there
was no compulsion on customers-they could send goods either at
owner’s risk or at carrier’s risk. Hence, charging extra amount by
transporter for taking goods at his risk is not tie-in sales.
C.EXCLUSIVE SUPPLY AGREEMENT: [S.3(4)-Expln (b)]:
Includes-any agreement restricting in any manner the purchaser in the
course of his trade from acquiring or otherwise dealing in any goods
other than those of the seller or any other person.
D. EXCLUSIVE DEALING AGREEMENT: Was a RTP under MRTP Act.
Meaning – Not to deal with goods other than those of seller.
CASE LAW:
• BHARATIA CUTLER HAMMER LTD, In Re – Manufacturer of ‘A’ type of
scooter stipulating that dealer of ‘A’ should not deal in any other type
Dr. KUMUDHA RATHNA
of scooter, i.e., manufacturer asking dealer not to deal in similar
products of his competitor, directly/indirectly. Condition that dealer
shouldn’t deal in other’s goods and discontinuation of supplies on
the ground that dealer also deals in products of supplier’s
competitors –HELD-RTP.
• DGIR v. STUDDS ACCESSORIES (P) LTD –Buyer asking manufacturer
not to manufacture identical goods for any other buyer without
consent of buyer.
• DGIR v. MUNDIPHARMA AG –Agreement that distributor will purchase
goods only from the manufacturer or from other as may be nominated
by him.
• VADILAL ENTERPRISES LTD. In re –Territorial restrictions, i.e., not to
sale beyond prescribed territory.
• DGIR v. KOTHARI ELECTRONICS –HELD-Exclusive dealing cannot be
permitted unless it is shown that it is in public interest.
EXCLUSIVE DEALING AG-PERMITTED:
CASE LAW:
• TATA ENGINEERING (TELCO) v. RRTA (Registrar Of Restrictive Trade)
–Exclusive dealing & territorial restrictions were held reasonable as it
led to prompt after-sales service to buyers & hence were permitted.
• GUJARAT BOTTLING Co LTD v. COCA COLA –SC-HELD-Negative
covenant restraining franchises from dealing with competing goods
during term of franchise agreement is valid-not RTP.
E.RESALE PRICE MAINTENANCE [S.3(4)-Expln (e)]: DIRECTLY OR
INDIRECTLY DETERMINING PRICE [S.3 (3)]:
Meaning: Not to allow resale below certain price or not to sell above a
certain price.
Includes any ag to-sell goods on condition that the prices to be charged
on the resale by the purchaser shall be the prices stipulated by the
Dr. KUMUDHA RATHNA
seller unless it is clearly stated that prices lower than those prices may
be charged.
CASE LAW:
• CALCUTTA GOODS TRANSPORT ASSOCIATION v. TRUCK
OPERATORS UNION –Association of lorry owners fixing freight rates
& not allowing members of association to charge price lower than that
fixed by association is RTP.
• DGIR v. INFAR (INDIA) LTD –HELD-If the price indicated is ‘Maximum
Retail Price’-it is obvious that the retailers are authorised to sell the
product at prices below the maximum. It is not necessary to
specifically state that price below the max retail price can be charged.
• REGISTRAR v. BENNETT COLEMAN & Co LTD –HELD-Newspapers
are exempt from s.39 & 40 (i.e., they can prescribe minimum price).
REASON-This is because speed is essence of publishing a
newspaper. Allowing retailer or vendor to bargain the price would
delay the process of reaching consumers fast. This will reduce
circulation, which will lead to reduction in quality & also increase in
costs. This will not being long term interest of public.
DIRECT PRICE MAINTENANCE PERMITTED: Permitted.
Meaning: Where the manufacturer sells goods through its own retail
shops & fixes prices to be charged in such shops (Eg: Bata, Gwalior etc
retail shops). Fixing price in such shops is not prohibited.
F. REFUSAL TO DEAL: [S.3(4)-Expln (d)]:
Includes-any agreement which restricts/likely to restrict-by any method-
the persons/classes of persons to whom goods are sold or from whom
goods are bought.
AGREEMENT NOT ANTI-COMPETITIVE: [S.3(5)(i)]:
AGREEMENTS PERMITED BY LAW:
Dr. KUMUDHA RATHNA
Right of any person to-restrain (infringement of)-impose reasonable
conditions (for protecting any of his rights conferred upon him under
any of the following Acts)-not anti-competitive.
The Copyright Act, 1957.
The Patents Act, 1970.
The Trade & Merchandise Marks Act, 1958 OR The Trade Marks
Act, 1999.
The Geographical Indications Of Goods (Registration & Protection)
Act, 1999.
The Designs Act, 2000.
The Semi-conductor Integrated Circuits Layout-Design Act, 2000.
RIGHT FOR EXCLUSIVE EXPORT: [S.3(5)(ii)]:
No restriction on-the right of any person to export goods from India-to
the extent to which the ag relates exclusively to the-production/ supply/
control of goods/ distribution/ services-is not anti-competitive.
FACTORS TO BE CONSIDERED WHILE DECIDING EFFECT OF
COMPETITION:
The Commission shall have due regard to the following factors-while
determining whether an ag has an appreciable adverse effect on
competition within India (u/s.3):-
➢ Creation of barriers to new entrants in the market;
➢ Driving existing competitors out of the market;
➢ Foreclosure of competition (Market foreclosure is production
limitation put on a producing organisation-if it’s denied access to a
supplier, i.e., upstream foreclosure OR denied access to buyer/s, i.e.,
downstream) by hindering entry into the market;
➢ Accrual of benefits to consumers;
➢ Improvements in production/distribution of goods or provision of
services;
➢ Promotion of technical, scientific & economic development by
means of production/distribution of goods/services.
Dr. KUMUDHA RATHNA
RULES FOR DETERMINING EFFECT OF COMPETITION:
A.THE RULE OF REASON:
Restrictions have to be considered on a case to case basis, i.e., basing
on the facts of each case, the market & the existing competition.
Because the ‘per se’ rule-if applied literally, would render even normal
trade as restraint of trade & as restraint of trade is the very essence of
every contract, American Courts developed this ‘rule of reason.’
What determines the issue (in each case) is the actual or probable
restraint on competition in the relevant market.
The rule of reason-explained by US SC in BOARD OF TRADE OF CITY
OF CHICAGO v. US –“Every agreement concerning trade, every
regulation of trade, restrains. To bind, to restrain, is of their very
essence. The true test of legality is whether the restraint imposed is
such as merely regulates & perhaps thereby promotes competition or
whether it is such as may suppress or even destroy competition.”
This principle has been accepted by the SC of India also.
CASE: TATA ENGINEERING (TELCO) v. REGISTRAR OF RESTRICTIVE
TRADE AGREEMENT –Telco had entered into agreements with its
(Truck) dealers. Some of the clauses were-
o Dealer will not directly/indirectly sell the Tata trucks outside the
territory assigned to him (i.e.. geo limits);
o Dealer will maintain organisation/s for sale/service within his
territory-to the satisfaction of TELCO;
o Dealer will not sell, directly/indirectly-trucks of any other
manufacturer.
Telco argued as follows-
o To ensure equitable distribution of trucks so that the trucks reach
even remote places like Nagaland etc the first restriction. If not,
trucks will be concentrated in large metro-centres only where
demand is heavy.
Dr. KUMUDHA RATHNA
o Sales tax rates vary from State to State. If there is no territorial
restriction, business will be concentrated in the States where
sales tax rate is lower.
o Prompt/efficient after sales service is vital for the truck user.
Dealer has to maintain at all times an adequate stock of spares,
good service facilities & trained mechanics. This would cost Rs.5
Lakhs. Consumer interest demands that he gets good after sales
service.
o After sales service needs specialisation which would not be
possible if the dealer deals in trucks of other makes.
Thus ultimately-consumers benefit if the clauses are included in the
agreement. HELD-SC accepted these contentions & declared that
restrictions imposed by TELCO do not amount to RTP.
OBITER DICTA-Ag which restrains/ binds-persons/ places/ prices
wouldn’t be per se, bad. The ? is whether the restraint is such as to
regulate & thereby promote competition OR suppresses competition.
Hence, applying rule of reason-matters to be considered-(a)Facts
particular to business; (b)Conditions before & after restraint &
(c)Probable effects of restraint.
B.THE PER SE RULE:
In U.S. in the initial stages of the admn of Sherman Act, 1980-there was
a blanket prohibition of all contracts/combinations in the form of Trust
in restraint of trade/commerce. These were regarded as ‘per se’ bad.
Thus-it is unnecessary to consider-whether the agreement or clauses
there in-limit/restrict competition.
This is based on-established experience of their nature to produce anti-
competitive effects. Hence it’s not necessary to prove anti-competitive
effect of these clauses.
CASE: NORTHERN PAC. R Co v. US –“There are certain agreements or
practices which because of their pernicious effect on competition & lack
Dr. KUMUDHA RATHNA
of any redeeming virtue are conclusively presumed to be unreasonable
& therefore illegal without elaborate inquiry as to the precise harm they
have caused or the business excuse for their use.”
In India-these 2 rules are applied as follows-ambivalently:
a) S.3(3)(a) to (d) – Following clauses in ags presumed to have an
appreciable adverse effect on competition-
• (a)Directly/indirectly determines purchase/sale prices;
• (b)Limits/controls-production/supply/markets/tech development/
investment/services;
• (c)Shares the market/source of production/provision of service-
by-Allocation of geographical area of market or type of goods/
services or # of customers in the market or any similar way;
• (d)directly/indirectly results in big-rigging or collusive bidding.
b)S.3(4)(a) to (e) – will be examined by applying ‘Rule of Reason’-in
determining whether they cause or likely to cause an appreciable
adverse effect on competition in India.
• (a)Tie-in-ag;
• (b)Exclusive supply ag;
• (c)Exclusive distribution ag;
• (d)Refusal to deal;
• (e)Resale price maintenance.

ABUSE OF DOMINANT POSITION (AOD):

DOMINANT POSITION [S.4(2) Expln (a)]:

Definition:
The dictionary meaning of the word ‘dominant’ is ‘overriding/influential’.
In simple terms, abuse of dominant position refers to the conduct of an
enterprise that enjoys a ‘dominant position’ (as defined by the Act).
Dominant position-means- [S.4 Expln]
Dr. KUMUDHA RATHNA
i. A position of strength;

ii. That position being enjoyed in a relevant market in India;

iii. Operate independently of competitive forces prevailing in the

relevant market OR

iv. Affects its competitors/consumers/relevant market in its favour.

Thus a dominant enterprise is one that has the power to disregard

market forces (Competitors, customers & others) & to take unilateral
decisions that would benefit itself & also, in the process, cause harm to
the process of free competition, injuring the consumers by saddling
them with higher prices, limited supplies etc.

Concept of DP as explained in HOFFMANN-LA ROCHE & CO. AG.

BASLE v. COMMISSION OF THE EUROPEAN COMMUNITIES IN
BRUSSELS:-“The concept of abuse is an objective concept relating to
the behaviour of an undertaking in a DP which is such as to influence
the structure of a market where, as a result of the very presence of the
undertaking in question, the degree of competition is weakened and
which, through recourse to methods different from those which
condition normal competition in products/services on the basis of the
transactions of commercial operations, has the effect of hindering the
maintenance of the degree of competition still existing in the market or
the growth of that competition.’

DOMINANT POSITION ITSELF ISN’T PROHIBITED:

Some acts are bonafide & not taken to hamper competition. S.4(2)(a)
exempts such unfair or discriminatory trading conditions/prices or
predatory pricing referred to in S.4(2)(a)(i) & (ii), setting out those
practices as an abuse of dominant position, from being considered as
an abuse of a dominant position, when they are adopted to meet
competition. REASON-When enterprises are engaged in bonafide
Dr. KUMUDHA RATHNA
competition & readjusting their trading strategies to meet the terms of
offers of competitors in a market as it evolves, there is no abuse of any
of the enterprises. They are only responding to the market situation.

Eg: If prices fall in the market, for reasons not the action of an
enterprisea-a reduction in the price by that enterprise to match its
prices to the new prices cannot be termed unfair/predatory pricing.

FACTORS TO BE CONSIDERED WHILE DECIDING WHETHER AN

ENTERPRISE HAS A DOMINANT POSITION (DP):

The Commission shall (while inquiring whether an enterprise enjoys a

DP or not u/s.4) have due regard to all or any of the following factors-

a) Market share of the enterprise;

b)Size & resources of the enterprise;

c) Size & resources of the competitors;

d)Economic power of the enterprise including commercial advantage

over competitors;

e) Vertical integration of the enterprises or sale or service network of

such enterprises;

f) Dependence of consumers on the enterprise;

g)Monopoly/dominant position whether acquired as a result of any

Statute or by virtue of being a Govt. Company or a public sector
undertaking or otherwise.

h)Entry barriers including barriers such as regulatory barriers,

financial risk, high capital cost of entry, marketing entry barriers,
technical entry barriers, economics of scale, high cost of
substitutable goods or service for consumers;
Dr. KUMUDHA RATHNA
i) Countervailing (balance) buying power (so that buyers in affected
adversely by their DP);

j) Market structure & size of market;

k) Social obligations & social costs;

l) Relative advantage, by way of the contribution to the economic

development, by the enterprise enjoying a dominant position
having or likely to have appreciable adverse effect on competition.

m)Any other factor which the Commission may consider relevant for
the enquiry.

WHAT IS ABUSE OF DOMINANT POSITION [S.4(2)]:

If an enterprise or group follows any of the following practices-it is

abuse-NO further PROOF of any damage/loss is required.

Unfair/Discretionary Conditions In Purchase/Sale [S.4(2)(a)]:

• Unfair/discretionary conditions in purchase/sale of goods/services

OR

• Price in purchase/sale (including predatory price) of goods/

services is abuse of dominant position.

Expln: Above practice isn’t abuse if adopted to meet competition.

Limiting/Restricting Production/Development [S.4(2)(b)]:

• Limiting/restricting-production of goods or provision of services or

market there for OR

• Limiting/restricting-technical or scientific development relating to

goods or services to the prejudice of consumers, is an abuse of
DP.

Denial Of Market Access [S.4(2)(c)]:

 Dr. KUMUDHA RATHNA
(in any manner), is abuse of dominant position.

Supplementary Obligations Unconnected To Main Contract: [S.4(2)(d)]

Making conclusion (formation) of contract subject to acceptance by

other parties who are not connected to the nature/subject matter of the
contract-is abuse of dominant position.

Using Dominant Position To Enter Another Market: [S.4(2)(e)]

Using dominant position in one relevant market to enter into another

relevant market-is abuse of dominant position. (Eg: Microsoft used its
DP in disk operating system to dominate browser market & ruined
Netscape).

DIVISION OF ENTERPRISE ENJOYING DOMINANT POSITION: [S.28 –

Incorporated into the Act in 2009]]

The Competition Commission may (not withstanding any other Law for
the time being in force) direct-division of an enterprise enjoying
dominant position to ensure that an enterprise enjoying dominant
position, doesn’t abuse it.

Such Order may provide for any/all of the below mentioned matters:-

• Transfer/vesting of pty/rights/liabilities/obligations;

• Adjustment of contracts either by discharge or reduction of liability/

obligation or otherwise;

• Creation/allotment/surrender/cancellation of any shares / stocks or

securities;

• Formation/winding-up of an enterprise or the amendment of the MoA

or AoA or any other instrument/regulation the business of any
enterprise;
Dr. KUMUDHA RATHNA
• Extent to which, & the circumstances in which, provision of the
Order affecting an enterprise may be altered by the enterprise & the
registration thereof;

• Any other matter which may be necessary to give effect to the

division of the enterprise.

No Compensation to Officer of Company [s.28(3)]:

No Officer of a company who ceases to hold office as such in

consequene of the division of an enterprise shall be entitled to claim
any compensation for such cesser. This is not withstanding any other
Law for the time being in force OR in any contract OR in MoA OR AoA.

INQUIRY INTO AGREEMENTS-AS TO-ABUSE OF DOMINANT POSITION:

Enquiry by CCI: [S.19(1)]

CCI may enquire-into-any alleged contravention of provisions of Ss.3(1)

&/or 4(1)-

➢ Suo Motu OR

➢ On receipt of any info (in the manner & with fee as determined by
regulations)-from any person/consumer/their association or trade
association OR

➢ On a reference made to it by C.Govt/St.Govt/Statutory authority.

Director General has not the power to enquire on his own.

Procedure For Enquiry u/s.19: (S.26)

o On receipt of reference from Central/State Govt/Statutory Authorithy

or suo motu or info recd. u/s.19-if CCI opines that there exists a-prima
facie case.
Dr. KUMUDHA RATHNA
o Shall issue a direction (as per Regulation.18 of CCI (General)
Regulations, 2009 - the Secretary shall convey the directions of the
Commission to DG within 07 days) to the Director General (DG) to
cause an investigation to be made into the matter. This direction shall
be deemed to be commencement of an inquiry u/s.26.

o If on such receipt of info or suo motu-if CCI opines that there exists
no prima facie case-shall close the matter forthwith & pass such
Orders as it deems fit; Copy of the Order to be sent to C.Govt/St.Govt/
Statutory Authority/parties concerned (as per Regulation.19 of CCI
(General) Regulations, 2009).

o DG shall submit a report of his findings-within such period as may be

specified by the CCI. CCI may forward a copy of the report to the
parties concerned.

o If investigation was made on ref by C.Govt/St.Govt.Statutory

Authority-CCI shall forward a copy of report of DG to concerned
Authority.

Investigation & report by DG shall be as per Regulation.20 of CCI

(General) Regulations,2009.

o If report of DG states that there is no contravention of provisions of

Competition Act, the CCI shall invite objections/suggestions from
C.Govt /St.Govt/Statutory Authority/Parties Concerned.

o If after consideration of objections/suggestions-CCI agrees with the

recommendations of the DG-it shall close the matter forthwith & pass
such Orders as it deems fit.

o Copies of Order shall by communicated to concerned to the parties.

o If CCI opines that further investigation is called for-May-

• Direct DG for further investigation OR

Dr. KUMUDHA RATHNA
• Cause further enquiry to be made OR

• Itself enquire into the contravention as per provisions of Act.

o Further enquiry by CCI: If DG-opines (report) that there is a

contravention of any provisions of the Act & the CCI also opines
similarly-CCI shall conduct such enquiry.

o Order by CCI after enquiry: May pass all or any of the following
Orders:-

• Order to discontinue agreement/abuse & not re-enter such

agreement;

• Penalty – S.27-upon each of the parties to the agreement/abuse-as

CCI deems fit-BUT shall not be more than 10% of the average of
the turnover for the immediately preceding 3 financial yrs [S.27(b)]

➢ If Cartel-penalty - equivalent to 3 times of the amount of

profits made for each year of continuance of such
agreement OR 10% of the avg of the turnover of the cartel
for each year of continuance of such agreement..whichever
is higher - will be imposed on each producer, seller,
distributor, trader, service provider included in the cartel
(b)

➢ discontinue such agreement & not to re-enter such ages.

OR discontinue the abuse of DP (a)

➢ Agreement be modified to the extent & in the manner as

maybe specified by CCI [S.27 (d)]

➢ If penalty is proposed to be imposed on a person-show

cause notice duly signed by Secretary shall be given
asking for submission of explanation-in writing-within 15
days.
Dr. KUMUDHA RATHNA
• CCI may direct that the Other Orders & payment of costs [S.27(e)].

• Order against any group company: If the enterprise which violated

the provisions of Competition Act (i.e., Ss.3-4) is a member of the
group & if other members of the group are also responsible for the
contravention, the CCI can pass Orders against any member of the
group [S.27-Proviso].

CASE LAW:

• HOFFMANN-LA ROCHE & CO. AG, BASLE v. COMMISSION OF THE

EUROPEAN COMMUNITIES IN BRUSSELS –Held (by The European
Commission)-

• Roche was in a dominant position within the common market, on

the markets for certain vitamins, abused that position by
concluding with 22 purchasers of these vitamins, agreements
which contained an obligation upon them, or the grant of fidelity
rebates offering them an incentive, to buy all or most of their
requirements of vitamins exclusively, or in preference from Roche.
Obiter dicta-Very large shares in the market in themselves, save in
exceptional circumstances, evidence of the existence of a DP.

• Exclusive purchase contracts & the fidelity rebates offered to the

purchasers amounted to abuse of this dominant position because
they distorted competition between producers in so far as they
deprived the customers of Roche of the opportunity of choosing
their suppliers.

• The effect of the contract was to apply dissimilar conditions to

equivalent transactions, viz, Roche would be charging 2 diff prices
for the same quantity of the same product, depending upon
whether the buyer was prepared to forego purchasing from
Roche’s competitors.
Dr. KUMUDHA RATHNA
Court Explained-‘An undertaking which has a very large market share &
holds it for some time, by means of the volume of production & the
scale of the supply which it stands for-without those having much
smaller market shares being able to meet rapidly the demand from
those who would like to break away from the undertaking which has the
largest market share-is by virtue of that share in a position of strength
which makes it an unavoidable trading partner & which, already
because of this secures for it, at the very least during relatively long
periods, that freedom of action which is the special feature of a DP.’

Further the Court listed the relevant factors in determining the existence
of a DP-

• Relationship between the market shares of the undertaking & its

competitors;

• Technological lead of an undertaking over its competitors;

• Existence of a highly developed sales network;

• Absence of potential competition.

• COMPAGNIE MARITIME BELGE TRANSPORTS SA & OTHERS v.

COMMISSION OF THE EUROPEAN COMMUNITIES –The members
of Associated Central West Africa Lines (CEWAL) & 2 other
shipping conferences brought this action contesting before the
Court the decision of the Commission & the Court of 1st Instance.
The Commission had decided that all the shipping conferences
had violated Article 81(1) of the EEC (European Economic
Community) Treaty, by entering into non-competition agreements
with 1 another, imposing on themselves a restraint to the effect
that each member would refrain from operating as an independent
shipping company (outsider) in the area of activity of the others.
HELD –This was abuse of their collective dominant position by the
Dr. KUMUDHA RATHNA
members of CEWAL-with the intention of eliminating the principal
independent competitor-by

o Participating in the implementation of the co-operation ag with

Ogefrem;

o Modifying its freight rates by departing from the tariff in force in

order to offer rates.

It was argued that in order to show that DP was shared by more than 1
undertaking a close economic link bet them had to be established.

Court Ruled-

• DP may be held by 2 or more economic entities legally

independent of each other, provided that from an economic point
of view they present themselves or act together on a particular
market as a collective entity.

• It should be ascertained whether the undertakings constitute a

collective entity vis-a-vis their competitors / trading partners &
consumers for a particular market & if that collective entity
actually holds a DP & whether its conduct constitutes abuse.

Court held that the co-operation agreement with Ogefrem amounted to

abuse of DP.

*****