India: Abuse of Dominance

The enactment of the Competition Act 2002 (the Act), the principal legislation governing competition law in India, along with the establishment of the Competition Commission of India (CCI)1 as its chief enforcement authority, has been one of the biggest game changers in the Indian regulatory space. The Act regulates markets in India with the objective of promoting and sustaining competition and, more importantly, protecting consumer interests. Akin to competition regimes in mature jurisdictions, India’s competition law covers within its ambit the regulation of anticompetitive conduct, abuse of dominance and unilateral conduct, and combinations. This article focuses on enforcement of provisions relating to unilateral conduct of enterprises and explores the trends in this area, which are steadily evolving on a case-by-case basis.

Abuse of dominance under the Act

The regulation of abuse of dominance is an important pillar of India’s competition policy. The substantive test and benchmark for analysis under the Act is to prohibit practices that have an appreciable adverse effect on competition in India. Section 4 of the Act regulates unilateral conduct by dominant enterprises. The Act prohibits the abuse of a dominant position by any ‘enterprise or group’, and defines dominant position as a position of strength enjoyed by an enterprise in the relevant market in India that enables it to:

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

In India, the determination of ‘dominance’ is based on a qualitative assessment of the prevalent market dynamics and the relative position of strength enjoyed by the market participant. This reflects a more reasoned approach and is a welcome departure from the earlier competition law regime under the aegis of the Monopolies and Restrictive Trade Practices Act 1969, wherein emphasis was placed on the size of the concerned player, rather than the actual abusive practice or conduct of such a player.

The Act covers within its ambit both exclusionary as well as exploitative abuses and provides a list of prohibited conduct by dominant enterprises, including imposition of unfair or discriminatory conditions on price in purchase or sale (such as predatory pricing), limiting or restricting the production of goods, denial of market access and leveraging market position in one relevant market to enter into another relevant market. Further, except for the limited defence of ‘meeting competition’ in relation to imposition of unfair and discriminatory prices or conditions, the Act does not provide for any other exemption to an abuse of dominance violation. This is in stark contrast to the European Union, where the ‘objective justification’ or ‘efficiencies’ defence has often been held to be a valid defence. However, the CCI has recently begun to consider business and commercial justifications on a case-by-case basis as a potential defence in such cases.

While determining the abusive conduct of a dominant enterprise or group, a three-step analysis is required to be undertaken:

• determination of the relevant market;
• assessment of dominance of such enterprise or group; and
• assessment of its abusive conduct.

Unlike other jurisdictions, there is no bright line market share test, and for the determination of dominance under the Act, the CCI may consider the following indicative factors:

• market share;
• size and resources of the enterprise;
• size and importance of 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;
• legal monopoly or dominant position;
• entry barriers, including regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale and high switching costs;
• countervailing buyer power;
• market structure and size of the market;
• social obligations and social costs;
• relative advantage, by way of the contribution to the economic development, by the dominant enterprise; or
• any other factor that the CCI may consider relevant for the inquiry.

The CCI’s jurisdiction

The Act prohibits abuse of dominance by an ‘enterprise or group’. In terms of the conduct/activity that can be scrutinised, the CCI in Reliance Big Industries & Ors v Karnataka Film Chamber of Commerce & Ors,2 held that only the conduct of an ‘enterprise’ can be examined under the provisions of section 4 of the Act. For the purposes of the Act, a person or a department of the government engaged in any activity relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, would constitute an ‘enterprise’.3 Therefore, the Act is ownership-neutral and is equally applicable to both private enterprises as well as government bodies/departments, acting in their commercial capacity or when engaged in economic activities. For instance, in Rajat Verma v Haryana Public Works (B&R) Department,4 the Competition Appellate Tribunal (COMPAT)5 held that by inviting tenders for award of contract for construction of roads, bridges, etc, the public works department was interfacing with the wide market of road and bridge construction services. In doing so, the public works department was also acting as a service provider to the general public, which would result in it constituting an ‘enterprise’ under the Act.

On similar lines, the CCI recently found the Uttarakhand Agricultural Produce Marketing Board (Board) (established under a statute), Garhwal Mandal Vikas Nigam Ltd and Kumaun Mandal Vikas Nigam Ltd (entities fully owned by the State of Uttarakhand) to have prima facie abused their dominance in the markets for procurement and distribution of alcoholic beverages, by not undertaking procurement on the basis of actual demand.6 This, per the CCI, had limited and restricted production of alcoholic beverages and had resulted in denial of market access. The CCI also directed investigation into abusive and unfair clauses in agreements between the Board and alcoholic beverage manufacturers.

Both the COMPAT7 and the CCI have also clarified that ‘profit motive’ is not a sine qua non for qualifying as an ‘enterprise’.8

Notably, the Act provides an exemption to any activity that relates to the sovereign functions of the government, including those related to energy, currency, defence and space. For instance, an activity in relation to the collection of taxes (a purely sovereign function) would not fall within the purview of the Act and an entity discharging such functions would not constitute an enterprise (M/s Red Giant Movies v Secretary, Commercial Taxes & Registration Department, Government of Tamil Nadu and the Commissioner, Commercial Taxes Department, Government of Tamil Nadu).9

The CCI has also recognised the applicability of the provisions of section 4 of the Act in markets that do not reflect the traditional buyer-consumer relationship. In a case against Google10 (Google case), where the CCI imposed a headline fine of 1,358.60 million rupees on Google, the CCI considered jurisdictional issues to entertain an abuse of dominance allegation against Google’s search services, with Google arguing that in the absence of purchase or sale of goods or services (as Google provides free search to users), provisions of section 4 would be inapplicable. Emphasising the role of big data in the digital economy, the CCI held that the ‘eyeballs’ and the data that users provided Google, facilitated generation of revenue by Google through attracting advertisers. This rendered Google’s arguments on there being no sale or purchase, as nugatory.

Relevant market

It is only within the parameters of a correctly defined relevant market that dominance of an entity can be assessed. Therefore, delineation of the relevant market is imperative to any abuse of dominance analysis.

The relevant market is an aggregation of the relevant product market and the relevant geographic market.11 The relevant product market is defined as a market for all those products or services that are regarded as interchangeable or substitutable by the consumer, on the basis of the characteristics of the product, its price and intended use.12 The relevant geographic market is defined as a market comprising the area in which there exists distinct homogenous competitive conditions in terms of demand and supply of goods or services that can be distinguished from the conditions prevailing in the neighbouring areas.13

In the absence of specific guidelines for defining the relevant market and economic tests capable of application in the Indian market (on account of lack of market data, challenges in conducting surveys and identifying a suitable sample group, etc), determination of the relevant market by the CCI is often guided by common perception and lacks adequate economic data or analysis. This is evidenced by the CCI’s decision in Surinder Singh Barmi v The Board of Control for Cricket in India14 (BCCI case), where the CCI restricted the market to organisation of professional domestic cricket leagues or events in India by ‘conceptually’ applying the small but significant non-transitory increase in price test and observing that the ‘alleged abuse plays an important role in identifying the focal product’.

In terms of the geographic market, the CCI has restricted the relevant geographic market to particular suburbs in some cases (such as Belaire Owners’ Association v DLF Limited,15 Mr Om Datt Sharma v M/s Adidas AG & Ors16 and In Re: R Ramkumar v Akshaya Private Ltd17) and has, without any specific differentiation, defined the relevant market on an ‘all India basis’ in other cases. For instance, in Consumer Guidance Society v Hindustan Coca Cola Beverages Pvt Ltd & INOX Leisure Private Ltd,18 the CCI held that the relevant geographic market could not be confined to the closed market inside the premises of multiplexes and defined the relevant market to be the market for multiplexes on an ‘all India basis’.

Interestingly, in its order in Maharashtra State Power Generation Limited v Coal India Limited and Ors19 in 2013, the CCI noted that defining a global market as the relevant market was contrary to the express provisions of the Act. The CCI reasoned that the explanation to section 4 of the Act indicated that the ‘dominant position’ is a position of strength enjoyed by an enterprise in the relevant market ‘in India’. Accordingly, the contention of the parties to define the relevant geographic market as the global market was held by the CCI as legally untenable. Though the facts of this case may have warranted restricting the relevant market to India, by concluding that a worldwide definition of the relevant market would not be permissible in any instance of abuse of dominance, the CCI has adopted a narrow view. This approach was also mirrored in the Google case, where the CCI reiterated that the geographic market could not have been global based on the provisions of section 4 of the Act.

By adopting this restrictive approach, the CCI has failed to consider the case of products or services which are not affected by national barriers. For instance, in Shri Vinod Kumar Gupta, Chartered Accountant v WhatsApp Inc20 (WhatsApp case), the CCI restricted the geographic market for consumer communication apps to India, despite noting that ‘the functionality provided by consumer communication apps through smartphones is intrinsically cross-border’ and that ‘developers distribute similar products to all of their customers regardless of their geographic location’.

In terms of the product market definition, the CCI has primarily considered demand-side substitution as a determining factor in delineating the relevant product market. For instance, in Maharashtra State Power Generation Limited v Coal India Limited and Ors21 (Coal India case), the CCI did not include imported coal as part of the relevant product market, since imported coal could not be used as a substitute for domestic coal. This determination was based on price as well as the peculiar design and specifications of the boilers used in majority of Indian thermal power plants that are suited to domestically manufactured coal. The CCI has sparingly also placed reliance on supply-side substitutability when delineating the relevant product market as evidenced in its decision in Bharti Airtel Limited v Reliance Jio Infocomm Limited22 (Reliance Jio case). In the instant case, the CCI refused to delineate separate telecommunication service markets based on technology, such as 4G or 3G, by inter alia considering that any new entrant in the telecommunication market would likely adopt the most advanced technology available at that moment and later, upgrade its network to newer technologies from time to time.

The CCI, while analysing cases relating to the Indian online retail industry, has demonstrated a varied approach in defining the relevant market. In Ashish Ahuja v Snapdeal.com and Ors,23 the first case in this sector, the CCI concluded that online retail and brick and mortar sales of distribution were not two different relevant markets but were merely different channels of distribution of the same product. However, in a more recent case involving e-tailers, ie, Mohit Mangalani v Flipkart India Pvt Ltd and Ors,24 the CCI left the definition of relevant product market open and opined that it was not taking a stand on whether the ‘e-tail market was indeed a separate relevant product market or a sub-segment of the market for distribution’.

In Shri Shamsher Kataria v Honda Siel Cars India Ltd & Ors25 (Auto Parts case), the CCI undertook a detailed analysis while delineating the relevant market. In this case, the information was filed against various automobile manufacturing companies or original equipment manufacturers (OEMs) on the basis that the OEMs were involved in activities leading to competition law concerns in India by restricting the availability of genuine spare parts of auto­mobiles manufactured by them in the open market. It was also alleged that the car manufacturing companies controlled the operations of various authorised workshops and service stations that were in the business of selling automobile spare parts besides rendering aftersales automobile maintenance services. The technological information, diagnostic tools and software programmes required to maintain, service and repair the technologically advanced automobiles manufactured by each OEM were unavailable in the open market. Consequently, the repair, maintenance and servicing of such automobiles could only be carried out at the workshops or service stations of the authorised dealers of the OEMs.

The CCI noted that the consumers in the primary market (ie, the market for the manufacture and sale of cars) did not, or could not, undertake a whole-life cost analysis at the time of purchase of the automobile and, accordingly, the CCI did not accept the ‘unified systems’ market definition submitted by the OEMs and concluded that the automobile primary market for automobiles and the secondary market (or ‘aftermarket’) for spare parts, diagnostic tools and repair services, did not constitute a unified systems market.26

Noting that each OEM had a 100 per cent market share in the aftermarket for its brand of cars, the CCI held each OEM to be a dominant entity. As such, the CCI considered each individual separate brand of automobiles as a separate relevant market, instead of considering the broader relevant market of the aftermarkets for the entire automobile industry. Based on this analysis, the CCI concluded that the OEMs had abused their dominant position in their respective aftermarkets by, inter alia, restricting the supply of spare parts, repair manuals and diagnostic tools to independent repairers. The order of the CCI was, in most parts, affirmed in appeal by the COMPAT.27

In the recent Google case, the CCI was reluctant in affording an expansive interpretation to demand-side or supply-side substitutability in online markets. The regulator was of the view that online general web search services were not substitutable with either:

• typing the URL of websites directly, as users may often be unaware of the URLs; or
• specialised search services, since they permitted search on particular topics or areas only.

Additionally, for search advertising services, the CCI found that offline advertising services as well as non-search advertising services (such as those provided by Facebook) were not substitutable.

Assessment of dominance

Under the provisions of the Act, dominance refers to the ability of an enterprise to operate independently of market forces and exploit its position of strength to affect competitors or consumers or the relevant market in its favour. While determining dominance, the CCI considers factors listed under section 19(4) of the Act. Additionally, although the CCI acknowledges that market shares are ‘the most important criterion/yardstick in the assessment of dominance’,28 there is no bright line market share test and the CCI has often adopted a holistic approach in concluding dominance. Reaffirming this view, in Mr Ramakant Kini v Dr L H Hiranandani Hospital, Powai, Mumbai,29 while assessing the dominance of the Hiranandani hospital in the relevant market for provision of maternity services by super speciality and high-end hospitals within a distance of 12 kilometres from the Hiranandani Hospital, the CCI clarified that the market share of an entity is ‘only one of the factors that decides whether an enterprise is dominant or not, but that factor alone cannot be decisive proof of dominance’.

Similarly, in In Re M/s ESYS Information Technologies Pvt Ltd and Intel Corporation (Intel Inc) & Ors,30 in addition to the market shares of Intel, the CCI’s assessment of Intel’s dominance was based on other relevant factors, such as consumer preference owing to the brand name, the existence of strong entry barriers in the relevant market, the significant intellectual property rights of Intel and the scale and scope enjoyed by Intel.

Going a step further, the COMPAT in Meru Travels Solutions Pvt Ltd v CCI,31 while admitting an appeal from the CCI’s order that dismissed an information of alleged abuse of dominance by Uber, specifically held that the CCI should have considered the larger picture in the radio taxi service market in terms of status of funding, global developments, statements made by leaders in the business, availability of financial resources, existence of discounts and incentives, etc. Further, the COMPAT observed that the availability of financial resources and existence of discounts and incentives associated with the model of business adopted are good supporting reasons to suggest that the issue of dominance needs to be seen from a perspective that does not limit to the market share of the enterprise alone. The case is currently under appeal before the Supreme Court of India.

In the Google case, the CCI also considered Google’s scale advantage, noting the unlikely possibility of users switching to competing platforms, if Google were to reduce quality or innovation. The CCI also factored the entry barriers, absence of countervailing buyer power of users or advertisers as well as Google’s market shares, which the CCI noted should ideally have been transient in innovation driven high technology markets.

Assessment of abusive conduct

In relation to the assessment of abusive conduct, section 4 of the Act lists a number of practices that are considered to be abusive which can broadly be divided into two separate kinds of abuses: exclusionary abuses, which include practices of the dominant entity having the effect of excluding other players in the relevant market; and exploitative abuses, which include practices of the dominant entity that tend to exploit their position by imposing unfair or discriminatory restrictions on other players and consumers in the market.

Statutorily, an abuse of dominance is required to be treated as a per se violation, and the CCI has followed this approach in several cases, including in the BCCI case, where the CCI found BCCI to have allegedly denied market access in the organisation of professional domestic cricket leagues or events in India by virtue of a clause in the media rights agreement entered into by it. Pursuant to this clause, BCCI undertook to not organise, sanction or support any other professional domestic Indian Twenty-20 league in India, and accordingly the CCI imposed a penalty on BCCI. In contrast, in Dhanraj Pillai v Hockey India,32 the CCI brought in the effects test and went so far as to state that the restrictive conditions imposed on hockey players were ‘intrinsic and proportionate’ to Hockey India’s objectives and therefore did not amount to an abuse of dominance. Subsequently, disregarding its own precedent, in Faridabad Industries Association v M/s Adani Gas Limited,33 despite Adani Gas Limited’s (AGL) good conduct by benefiting consumers and the ostensible clauses not being enforced, the CCI imposed a penalty on AGL. In XYZ v REC Power Distribution Company Ltd,34 the CCI again shifted towards the effects-based approach, observing that a denial of market access finding would require proving ‘anticompetitive effect/distortion in the market in which denial has taken place’. This was also echoed in the CCI’s order in In Re: Tata Power Delhi Distribution Limited and NTPC Limited,35 where it held that the seminal issue in cases of abuse of dominant position was the harm caused to the end consumers due to the behaviour of the dominant player. This demonstrates the varying position that the CCI has adopted and the need to develop a high degree of consistency and predictability in its assessment of abuse of dominance cases.

The trends in the CCI’s recent orders also indicate the CCI’s willingness to extend findings of abuse to novel categories of conduct and markets. Its recent findings of search bias by Google is an example. In this case, the CCI found Google to have abused its dominance by:

• resorting to search bias in its universal search results, which were not strictly determined by relevance, and thus unfair to users;
• prominent placement of its own commercial flight unit, linked to its specialised search options, which deprived users additional choice; and
• restrictive clauses under intermediation agreements that prevented partners from using search services of competing search engines.

Further, in Biocon Limited v F. Hoffmann-La Roche AG,36 the CCI recognised the possibility, albeit in exceptional cases, of legal processes being pursued by a dominant enterprise as a tactic to exhaust smaller rivals’ resources and delay or prevent their entry in the relevant market, which would amount to an abuse within the meaning of the Act.

Recently, the CCI has also reviewed protectionist conduct of dominant enterprises. For instance, in HPCL Mittal Pipelines Limited v Gujarat Energy Transmission Corporation Limited & Ors,37 the CCI considered allegations of denial of open access by the State Load Dispatch Centre, GETCO Gujarat (SLDC), which was required by consumers to source electricity through alternative suppliers. The CCI noted that every consumer hopeful of availing open access for supply of electricity in Gujarat was required to obtain the approval of SLDC and therefore, SLDC was found to be dominant. On assessment of the alleged abuse, the CCI prima facie found SLDC’s conduct to be in contravention of section 4 of the Act. Additionally, the CCI also noted that SLDC was leveraging its dominance to adversely affect competition in the downstream market, where it was operating through a group entity. Similarly, in In Re: XYZ v Association of Man-made Fibre Industry of India & Ors,38 the CCI prima facie noted that Grasim Industries Ltd was abusing its dominance by offering increased discounts to exporters as compared to its other customers who were competing with its subsidiaries in the downstream market.

Penalties and sanctions

The CCI has the power to impose the highest economic penalties in India amongst all regulators. In case of contravention of section 4 of the Act, the CCI is empowered to levy a penalty of up to 10 per cent of the average turnover of the enterprise for the preceding three financial years38 or direct the division of a dominant enterprise. However, as there are no guidelines issued by the CCI in relation to the determination of penalties, the CCI currently has absolute discretion in relation to the imposition of such penalties and in most cases, there is an absence of coherent justification for the penalties imposed. For instance, in the Auto Parts case, all the OEMs were fined the same percentage quantum, despite differences in market conduct that ought to have been considered as a mitigating factor.

The CCI has, in very few instances, taken into account factors that may mitigate the quantum of penalty. In a recent case, the CCI has considered the steps taken by the opposite parties in the interim period (between the informant filing information alleging an abuse of dominance and the CCI’s order), which may have an effect of reducing competition law concerns, while determining the penalty to be imposed. In the case of Indian Exhibition Industry Association v Ministry of Commerce & Industry & Anr,39 the Indian Exhibition Industry Association had approached the CCI against the Ministry of Commerce and Industry and the Indian Trade Promotion Organisation (ITPO), alleging the contravention of the provisions of section 4 of the Act based on the time gap restriction imposed by ITPO between two exhibitions or fairs. In 2006, the ITPO had reformulated certain guidelines imposing a ‘time gap restriction’ of 15 days between two events having similar product profiles and coverage for events that were not conducted by ITPO. However, in case of ITPO fairs, the time gap was 90 days before the start or 45 days after the close of an ITPO event. Further, in 2007, the concerned guidelines were reassessed and the time gap of 15 days was maintained. However, in case of ITPO and third-party fairs having similar product profiles, the time gap was 90 days before the ITPO’s event and 45 days after it. The CCI held that ITPO was ‘playing a dual role as a regulator as well as the organiser of exhibitions’ and, as such, considered the acts of ITPO to be an abuse of its dominant position. The penalty imposed by the CCI on ITPO was limited to 67.5 million rupees (around two per cent of the average of the turnover for the preceding three years). The removal of discriminatory features and the differences in time gap restrictions by an amendment in 2013 was considered by the CCI as a mitigating factor.

A similar approach was adopted by the CCI in the Coal India case, where the CCI found Coal India Limited (CIL) and its subsidiaries to have contravened section 4 of the Act, by imposing unfair and discriminatory conditions in Fuel Supply Agreements (FSAs) with the power producers for supply of non-coking coal. An original order of the CCI in 2013, imposing a penalty of 1,7730.50 million rupees, was remanded back to it by the COMPAT on grounds of violation of principles of natural justice. While passing its order in 2017, the CCI reduced the penalty to 5,910.10 million rupees, in light of the transformative steps taken and effected by CIL, during the pendency of the proceedings and even post-passing of the original order by CCI.

Additionally, the contentious issue of turnover to be taken into account while imposing penalties under the Act, has finally been settled by the Supreme Court of India in its decision in the Excel Crop Care case,40 where it was of the view that penalty on the basis of the ‘relevant turnover’ would be in tune with the ethos of the Act.

The Supreme Court laid down a two-step approach to determine the quantum of penalty, requiring that:

• the penalty should be based on the determination of the relevant turnover; and
• the penalty should be determined after considering the aggravating and mitigating circumstances relevant to each case.

The Supreme Court’s decision was adopted by the CCI in the Google case, which considered the revenue generated by Google from its Indian operations only. Given the nature of two-sided markets, where the search side is free and the other side is monetised through advertisements, the CCI regarded the revenues generated from the entire platform for the imposition of penalty.

As stated above, in addition to imposing monetary penalties, the CCI has other powers, such as directing the division of a dominant enterprise. Additionally, the CCI has also frequently applied its powers under section 27 to direct modification of abusive clauses in agreements. This power has, however, been read down by the COMPAT to only apply to those cases where there is a contravention of the provisions of section 3 of the Act pertaining to anticompetitive agreements. In the DLF case41, the COMPAT disapproved of the approach adopted by the CCI in directing the apartment buyers’ agreements (from which the abuse of dominance behaviour of DLF stemmed) to be amended, and noted that there was ‘absolutely no justification on the part of the CCI to change the language of the agreement altogether’. The COMPAT noted that the specific power to modify agreements can be exercised by the CCI only in the limited circumstances where it finds that such agreements violate the provisions of section 3 of the Act. The COMPAT specifically observed that ‘no provision in the Act permits the rewriting of the agreements’. The CCI has appealed COMPAT’s DLF order before the Supreme Court of India and has continued its practice of requiring modification of abusive clauses in subsequent cases, such as the Coal India case.

Trends in recent orders

The shift in focal point globally to digital markets has been mirrored in India, with the CCI reviewing several cases in innovation and technology driven markets. As mentioned above, the CCI recently imposed a penalty on Google at the rate of five per cent of its average turnover, for abusing its dominance in online general web search and search advertising. Noting the rapid growth in innovation cycles in the digital economy, the CCI observed that public intervention in these markets should be targeted and proportionate. It also emphasized that intervention in markets marked by innovation should be calibrated to ensure that it does not restrain innovation. The CCI highlighted that such an intervention would require consideration of the fast-moving innovation, novel products as well as the network effects, to prohibit abusive conduct which impacts not only the market as a whole but also complementary markets associated with the platform.

Adopting a cautionary approach, in In Re: Fast Track Call Cab Pvt. Ltd, Meru Travel Solutions Pvt Ltd and ANI Technologies Pvt. Ltd,42 the CCI refused to intervene in the online ride-hailing services market by finding that Ola was not dominant in the market for ‘radio taxi services in Bengaluru’. The CCI’s conclusion was primarily based on its unwillingness to view market shares in isolation to arrive at a conclusive finding regarding dominance. The CCI observed that ‘in case of new economy/hi-tech markets, high market shares, in the early years of introduction of a new technology, may turn out to be ephemeral’. The CCI also considered the nature of the platform as well as the network effects to conclude that Ola’s network effect was not strong enough to deter the entry and expansion of a competitor (Uber).

Similarly, while considering allegations of predatory pricing in the WhatsApp case, the CCI noted that the practice of not charging any fees was a standard industry practice followed by almost all the players in the relevant market for ‘instant messaging services using consumer communication apps through smartphones’ and consequently held that WhatsApp had not contravened section 4 of the Act.

Recently, in the Reliance Jio case, the CCI did not find that a prima facie case of predatory pricing by the new entrant, Reliance Jio, had taken place. The CCI noted that the entrant was not dominant in the wireless telecommunication services market, viewed as whole. In view of the ongoing evolution process of the telecommunication services, the CCI did not differentiate wireless telecommunication services based on technologies used (such as 3G or 4G) for providing such services. It also held that short-term business strategies of entrants to attract customers through offers and schemes could not be considered as anticompetitive.

Claim for damages

Notably, MCX Stock Exchange Ltd (MCX-SX) has filed an application with the COMPAT claiming damages of 5.9 billion rupees, stating that due to the NSE’s exclusionary conduct it had lost transaction charges of 2.2 billion rupees, along with a treasury income loss of 3.4 billion rupees. This is the first instance where a company has filed a claim for damages. Publicly available reports mention that MCX-SX intends to increase its claim for damages to 8 billion rupees.

Conclusion

In less than a decade of its existence, the CCI has become the watchdog to watch out for. As an extremely empowered authority, it has aggressively enforced the provisions of the Act to deter anticompetitive conduct and establish a culture for competition compliance. It has imposed headline fines and required dominant enterprises to reform business practices and steer away from abusive conduct. The number of remands by the COMPAT on procedural and substantive grounds have only made the CCI a better regulator, as it continues to evolve its practices and procedures. The orders passed in the year gone by provide a preview into the CCI’s outlook in recognising and enforcing the ‘special responsibility’ of dominant enterprises. Further, the past year saw a shift in the appellate body from the COMPAT to the National Company Law Appellate Tribunal (NCLAT). Unlike its predecessor, NCLAT has preliminary indicated a tendency to focus on substantive issues and going forward, its views are likely to further shape competition jurisprudence in India.

Separately, the CCI has also been involved in a conflict for regulatory supremacy with the Telecom Regulatory Authority of India (TRAI), particularly in light of the rapidly involving landscape of the telecommunications market. While the sector-agnostic CCI has opted to exercise its jurisdiction against telecom players for violations of the Act, it has been reprimanded by the Bombay High Court for doing so. Interestingly, the TRAI has recently amended its tariff order, granting itself the power to penalise telecom companies in case of predatory pricing. The matter is now before the Supreme Court and whether exclusive jurisdiction in matters of competition law will be granted to the CCI, remains to be seen.

The authors would like to acknowledge senior associate Arunima Chandra and associate Ruchi Verma of Cyril Amarchand Mangaldas for their contributions to this chapter.

Notes

1 The CCI is the principal regulatory body that regulates competition in India and has been established by the central government under section 7(1) of the Act.

2 Case No. 25 of 2010.

3 Section 2(h) of the Act.

4 Appeal No. 45 of 2015.

5 By way of the Government of India notification dated 26 May 2017, Part XIV of Chapter VI of the Finance Act 2017 was brought into force which led to the merger of the COMPAT with National Company Appellate Tribunal.

6 Case No. 2 of 2016. This case is currently being investigated by the director general.

7 Supra note 4.

8 Case No. 61 of 2010 (Order dated 29 November 2017).

9 Case No. 54 of 2014.

10 Case Nos. 07 and 30 of 2012.

11 Section 2(r) of the Act.

12 Section 2(t) of the Act.

13 Section 2(s) of the Act.

14 Supra note 8.

15 Case No. 19 of 2010.

16 Case No. 10 of 2014

17 Case No. 38 of 2017.

18 Case No. UTPE 99 of 2009.

19 Case Nos. 3,11 and 59 of 2012 (Order dated 9 December 2013).

20 Case No. 99 of 2016.

21 Case Nos. 3, 11 and 59 of 2012 (Order dated 24 March 2017).

22 Case No. 3 of 2017.

23 Case No. 17 of 2014.

24 Case No. 80 of 2014.

25 Case No. 3 of 2011.

26 The CCI combined the two relevant markets of sale of spare parts and sale of repair services, under the bigger ‘aftersales’ services as the two markets were interconnected.

27 Appeal Nos. 60, 61 and 62 of 2014.

28 Supra note 21.

29 Case No. 39 of 2012.

30 Case No. 48 of 2011.

31 Appeal No. 31 of 2016.

32 Case No. 73 of 2011.

33 Case No. 71 of 2012.

34 Case No. 33 of 2014.

35 Case No. 20 of 2017.

36 Case No. 68 of 2016

37 Case No. 39 of 2017. This case is currently being investigated by the director general.

38 Case No. 62 of 2016.This case is currently being investigated by the director general.

39 Case No. 74 of 2012.

40 Civil Appeal No. 2480 of 2014.

41 Appeal No. 20 of 2011, Appeal No. 22 of 2011, Appeal No. 19 of 2012, Appeal No. 23 of 2011, Appeal No. 12 of 2012, Appeal No. 20 of 2012, Appeal No. 29 of 2013, Appeal No. 8 of 2013, Appeal No. 9 of 2013 and Appeal No. 11 of 2013.

42 Case No. 06 and 74 of 2015.