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Abuse of Dominance

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This is a widely known term and has been explicitly incorporated in competition legislation of various countries. It refers to an anticompetitive business practice in which a dominant firm may engage in order to maintain or strengthen its position in the market. Such business practices by the firm may be considered restricting competition in the market. The different types of business practices that are considered as being abusive vary across countries as well as on a case by case basis. The business practices which have been contested in actual cases in different countries, not always with legal success, have included the following but not limited to: charging unreasonable or excess prices, price discrimination, predatory pricing, price squeezing by integrated firms, refusal to deal/sell, tied selling or product bundling and pre-emption of facilities.

As part of liberalization and on recommendation of high powered Raghvan Committee, the Competition Act, 2002 was enacted in India. Before the commencement of the 2002 Act, this phrase was not relevant in Indian context. Now, abuse of dominance is covered under section 4 of the Competition Act, 2002. in India, which has come into force from May 20, 2009. Abuse of dominance in Indian law has similar meaning as in other competition legislations. The said provision is applicable to all enterprises including public sector enterprises and Government. The said Act vests power in Competition Commission of India to investigate and inquire into instances of abuse of dominance and correct/penalize enterprise behaviour and help establish a competitive market. Commission has started receiving many cases relating to various aspects of abuse of dominance.

Abuse is stated to occur when an enterprise or a group of enterprises uses its dominant position (As per Competition Act 2002, dominant position is position of strength enjoyed by an enterprise in a relevant market, which enables it to operate independently of competitive forces prevailing in the relevant market; or affect its competitors or consumers or the relevant market in its favour) in the relevant market in an exclusionary or/and an exploitative manner. Such practices shall constitute abuse only when adopted by an enterprise enjoying dominant position in the relevant market in India.


References

Competition Commission of India, Advocacy Booklet Series 5, Abuse of Dominance, March 2011


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