Abuse of dominant position

The objective of the Competition Act is to eliminate the abuse of dominance through anti-competitive trade agreements. A position of strength, enjoyed by an enterprise in the relevant market is known as Dominant Position. Such position of domination enables the enterprise to: Operate independently of competitive forces prevailing in the relevant market Affect its competitors or consumers or the relevant market in its favour.

The Competition Commission of India (CCI) determines the market as relevant market on the basis of relevant product market or relevant geographic market. Abuse of dominant position includes the following: Imposing unfair conditions or price Predatory pricing Limiting production / market Creating barriers to entry Applying dissimilar conditions to similar transactions

Factors to be considered while deciding Dominant Position: Market share of the enterprise Size and resources of the enterprise Size and importance of the competitors Economic power of the enterprise including commercial advantages over competitors Vertical integration of the enterprises or sale or service network of such enterprises Dependence of consumers on the enterprise Whether dominant position is acquired as a result of any statute or by virtue of being a Government company or a Public Sector Undertaking Entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers Countervailing buying power Market structure and size of market Social obligations and social costs Relative advantages which could have appreciable adverse effect on competition Any other factor considered relevant by the CCI for inquiry

Practices Constituting Dominant Position: Abuse of Dominant Position is strictly prohibited and no proof of any damage or loss is required if abuse of dominant position is established. Following are the practices considered as abuse of Dominant Position: Unfair / discriminatory conditions in purchase or sale of goods or services: There shall be an abuse of dominant position if an enterprise or a group directly or indirectly imposes unfair or discriminatory: Condition in purchase or sale of goods or services Price in purchase or sale (including predatory price) of goods or service

Predatory price means the sale of goods or provision of services, at a price which is below the cost. This may be determined by regulations, of production of the goods or provision of services, for reducing competition or eliminating the competitors. Limiting or restricting production or development: There shall be an abuse of dominant position if an enterprise or a group limits or restricts: Production of goods or provision of services or market; or Technical or scientific development relating to goods or services to the prejudice of consumers Denial of market access: Indulging in practices that denies other potential competitors market access in any manner is abuse of dominant position. Supplementary obligations unconnected to main contract: Making 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 to such contracts, is abuse of dominant position. Use of Dominant Position to enter another market: Using dominant position in one relevant market to enter into, or protect, other relevant market is abuse of dominant position.

CASELET-Microsoft According to EUs press release, the following case had arisen out of a complaint filed in December 1998 by Sun Micro- Systems, a U.S. company and a competitor to Microsoft, alleging that Microsoft had refused to provide interface information which is necessary for Sun to develop products that could talk properly with the ubiquitous Windows PCs, and as a result they are not able to compete on an equal footing in the market for Work Group Server Operating Systems (WGSOS). The European Competition Commissioner investigated the matter and concluded that it was a market strategy designed by Microsoft to shut competitors out of the market. An overwhelming majority of customers informed the Commission that the non-disclosure of the interface to competitors alters their choice in favour of Microsofts server products. Survey responses submitted by Microsoft itself confirmed the link between the inter-operability advantage that Microsoft reserved for itself and its growing market share. In 2000, the Commission enlarged its investigation, on its own initiative, to study the effects of the tying of Microsofts Windows Media Player (WMP) with the companys windows 2000 PC operating system. This part of the investigation concluded that the ubiquity which was immediately afforded to WMP as a result of it being tied with the Windows PC OS artificially reduces the incentives of music, film and other media companies, as well software developers and content providers, to develop their offering to competing media players. As a result, Microsofts tying of its media player product has the effect of foreclosing the market to competitors, and hence ultimately reducing consumer choice, since competing products are set at a disadvantage which is not related to their price or quality.

The investigation was carried on for a period of over 5 years. After finding Microsoft guilty in both cases, the Commission imposed the following remedies:a) As regards tying of WMP, Microsoft is required, within 90 days, to offer to PC manufacturers a version of its Windows client PC operating system without WMP. The un-tying remedy does not mean that consumers will obtain PCs and operating systems without media players. Most consumers purchase a PC from a PC manufacturer which has already put together on their behalf a bundle of an operating system and a media player. As a result of the Commissions remedy, the configuration of such bundles will reflect what consumers want, and not what Microsoft imposes. b) As regards interoperability, Microsoft is required, within 120 days, to disclose complete and accurate interface documentation which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers. This will enable rival vendors to develop products that can compete on a level playing field in the work group server operating system market. The disclosed information will have to be updated each time Microsoft brings to the market new versions of its relevant products.