Abuse of dominant position and the relevant market

1. Step one: the relevant market

The relevant market is the market determined by the Commission with reference to the relevant product market, the relevant geographic market, or both (section 2(r); section 19(5)).

The relevant product market (section 2(t), as substituted in 2023) comprises all products or services (i) regarded as interchangeable or substitutable by the consumer by reason of characteristics, prices and intended use, or (ii) regarded as interchangeable by the supplier, by reason of the ease of switching production in the short term without significant additional cost or risk in response to small and permanent changes in relative prices. The second limb, supply-side substitution, is new.

Section 19(7) lists the factors: physical characteristics or end-use of goods or nature of services; price; consumer preferences; exclusion of in-house production; existence of specialised producers; classification of industrial products; and, since 2023, costs of switching demand or supply to other goods or services, and categories of customers.

The relevant geographic market (section 2(s)) is the area in which the conditions of competition for supply or demand are distinctly homogeneous and can be distinguished from neighbouring areas. Section 19(6) factors: regulatory trade barriers, local specification requirements, national procurement policies, adequate distribution facilities, transport costs, language, consumer preferences, need for secure or regular supplies or rapid after-sales service, and since 2023 characteristics of goods or nature of services and costs of switching supply or demand to other areas.

The economist’s tool behind these words is the SSNIP test (small but significant non-transitory increase in price, usually 5 to 10 per cent): would a hypothetical monopolist of the candidate products in the candidate area profitably raise price? If customers would switch enough to make it unprofitable, the market is wider.

2. Step two: dominance

“Dominant position” means a position of strength enjoyed by an enterprise in the relevant market in India which enables it to (i) operate independently of competitive forces prevailing in the relevant market, or (ii) affect its competitors or consumers or the relevant market in its favour (Explanation (a) to section 4). The test is economic strength, not a market-share number. The Commission must have regard to the section 19(4) factors:

• market share; size and resources of the enterprise; size and importance of competitors; economic power including commercial advantages;
• vertical integration or sale or service network; dependence of consumers;
• monopoly or dominance acquired by statute or as a government company or PSU;
• entry barriers (regulatory, financial risk, high capital cost, marketing, technical, economies of scale, high cost of substitutes);
• countervailing buying power; market structure and size; social obligations and social costs; relative advantage by contribution to economic development; any other relevant factor.

Section 4 applies to an enterprise or a group (Explanation (c)). Public sector undertakings are covered: in Coal India Ltd. v. Competition Commission of India, 2023 INSC 580, the Supreme Court rejected the argument that Coal India, a government company created after nationalisation and pursuing the common good, was outside the Act.

3. Step three: the abuses in section 4(2)

• (a) directly or indirectly imposing unfair or discriminatory (i) conditions or (ii) prices, including predatory price, in purchase or sale of goods or services. Conditions or prices adopted to meet the competition are excluded.
• (b) limiting or restricting production, provision of services or the market, or technical or scientific development, to the prejudice of consumers.
• (c) practices resulting in denial of market access in any manner.
• (d) making contracts subject to supplementary obligations which have no connection with their subject (tying).
• (e) using dominance in one relevant market to enter into, or protect, another relevant market.

Predatory price (Explanation (b)) is sale below cost, as determined by regulations, with a view to reducing competition or eliminating competitors. The elements: dominance, price below the relevant cost measure, and the anti-competitive aim. Recoupment of losses later is evidence but not a statutory element.

4. The cases

• Competition Commission of India v. Schott Glass India Pvt. Ltd., 2025 INSC 668. Schott, dominant in neutral borosilicate glass tubing for pharmaceutical containers, gave volume-based discounts and entered a supply arrangement with a joint venture. The Court dismissed the CCI’s appeal and upheld the Tribunal’s order setting aside the finding of abuse. It held that section 4 prohibits abuse, not dominance; that volume discounts applied on uniform, objective terms to all customers are not discriminatory; and that abuse must be established by assessing the effects of the conduct on competition, not inferred from its form.
• Belaire Owners’ Association v. DLF Ltd. (CCI, 2011). The CCI defined the market as high-end residential accommodation in Gurgaon, found DLF dominant, and held one-sided terms in its apartment buyers’ agreements to be unfair conditions under section 4(2)(a)(i), imposing a penalty of Rs. 630 crore.
• Google (Android). In October 2022 the CCI found that Google abused its dominance in several Android-related markets by requiring device makers to pre-install its suite of apps as a condition of access to the Play Store, and imposed a penalty of Rs. 1,337.76 crore with conduct directions. The NCLAT, in March 2023, upheld the findings of abuse and the penalty, while setting aside some of the directions. Appeals are pending in the Supreme Court; state only the NCLAT position unless a later judgment is reported.

5. Problem

A cement company with 55 per cent of sales in a northern State, where transport costs make cement from other regions uneconomic, cuts its price below its average variable cost in two districts where a new local plant has opened, while keeping prices high elsewhere. The new plant complains. Advise.

Issue. Whether the company holds a dominant position and has abused it by predatory or discriminatory pricing under section 4(2)(a)(ii).

Law. Relevant market under sections 2(r) to (t) and 19(6), (7); dominance under Explanation (a) and section 19(4); predatory price under Explanation (b); the effects-based approach in Schott Glass.

Application. Product market: cement (no close substitute for construction). Geographic market: the State, given transport costs and distinct conditions of competition (section 19(6)(e)). A 55 per cent share with large capacity, against a new small entrant, points to dominance. Pricing below average variable cost only where the entrant sells, with high prices elsewhere, shows both a below-cost price and the aim of eliminating a competitor; it is also discriminatory. It is not “meeting the competition”, since the entrant’s prices are not below the company’s cost. The likely effect is exclusion of the new plant and higher prices once it exits.

Conclusion. A prima facie case of abuse under section 4(2)(a)(ii) and (i) exists. The complainant should file information under section 19(1)(a) and may seek interim relief under section 33. On a finding of abuse, the CCI may order discontinuance and impose a penalty up to 10 per cent of average turnover (section 27), and in an extreme case direct division under section 28.

How this is examined

January 2026: “Explain abuse of dominant position and discuss the inquiry powers of Competition Commission” (Unit IV) and a note on predatory pricing (Unit III). The first is answered from sections 1 to 4 here plus sections 19 and 26 to 28 from the CCI powers note. Always write the three steps as headings.