Grey Areas of Competition Law Policies

1. Introduction: some areas which stand contrary. For example, acquisitions by way of slump sales, the CCI viewed this and reached to a conclusion that the India’s made its first official body to regulate vendor enterprise would be treated as a target competition in May 2009 and the Competition entity under the act. Secondly, there is a partial Commission of India (CCI) was set up under the exemption in intragroup mergers and Ministry of Corporate Affairs. It is a stand-alone amalgamations between the parent company body which is responsible for investigating and a subsidiary wholly owned by the same mergers, acquisitions, and pricing strategies of group or between subsidiaries wholly owned by different companies. What was earlier known as the same group. the Monopolies Restrictive Trade Practices Commission, 1969, was replaced by the Previously, these merger controls regime Competition Act, 2002. The market competition exempted only acquisitions between enterprises in today’s world has become brutal, and so the that belonged to the same group. Here we need Monopolies Restrictive Trade Policies Act, 1969 to understand that intra-group re-organizations became obsolete. The companies whose assets do not change the competitive structure of the were more than 100 crores were prevented from market and, therefore, should be wholly exempt expansion because permission from the from the purview of merger control. Government was needed for the same. Due to this, a paradigm shift was brought which focused Diving deeper into the concepts: on competition rather than on monopoly, and hence the Competition Act came into existence. A company having a market share more than 60% most likely has market dominance. A market share of over 35% but less than 60%, held by one brand, indicates market strength but not necessarily dominance. The concept of ‘relevant geographic market’ means a market comprising an area in which the conditions of competition for the supply or demand of goods or services are distinctly similar and can be distinguished from the conditions prevailing in the neighbouring areas. The big question marks: The Indian economy is emerging and is beginning Origin of the Act: to grow, but when a market player abuses his dominant position, it raises the tensions and this The Act is based on the footings of competition needs to be tested in law with increased law in the European Union (EU), but there are still frequency. Here we will be talking about the grey

2. area of ‘Abuse of dominant position’ and what is Now talking about ‘relevant market’, the CCI the answer to this. Last year, the Competition determines whether the relevant market is a Commission of India investigated into Amazon ‘geographic market’ or a ‘product market’, or for abuse of dominant position and concluded both. Section 19(7) lists out factors which that the retailer did not abuse his dominant determine what a ‘relevant product market’ is position. Now, Google’s G-pay services are under the radar for similar grounds. (factors such as physical characteristics, end-use, price, consumer preference); Section 19(6) speaks about ‘relevant geographic market’ (factors such as regulatory trade barriers, local specification requirements, distribution facilities). For example, books may be classified on the basis of their nature of sale or category. With the existence of e-commerce, there are two distinct markets—online and offline. A consumer looks at both before taking a decision. In the case of Ashish Ahuja v. Snapdeal.com, the CCI held that online and offline were just two different channels and not two different ‘relevant markets. So, the question of what is abuse of dominance still stands unanswered. Abuse actually occurs when an enterprise uses its dominant position in the relevant market to 1.It is important to understand the two concepts ‘dominance’ and ‘relevant market’ before we exploit, leading to its own advantage. To establish a consumer base and to acquire the move further with our quest for an answer. In a market, the e-commerce platforms use various generic sense, businesses should be competitive innovative methods such as exclusive and innovative and ‘dominance’ is not a bad agreements, deep discounting, preferential thing. However, from a legal perspective, treatment to certain sellers and predatory pricing ‘dominance’ means to enjoy the position of which raise competition concerns. strength by an enterprise in the (relevant) market and to operate free from the competitive forces The Act bars any enterprise from abusing its or being able to affect its competitors and dominant position. As per the Competition consumers’ behaviour in its favour. Section 19(4) Amendment Bill 2022 abuse of dominant of the Competition Act tells us the factors that position includes: determine whether an enterprise is ‘dominant’ or not. In the case of Lifestyle Equities v. Amazon • discriminatory condition/price in Seller Services Pvt Ltd, the Competition purchase or sale of goods or services, Commission of India held that Amazon did not • limiting or restricting production of hold a ‘dominant position’, as there was no goods or services, or question of ‘abuse of dominant position’. • indulging in practices resulting in denial of market access.

3. It is considered anti-competitive only if an interpretation of relevant product and enterprise holds a dominant position in the geographical market. Thus, there is a need to relevant market and is guilty of one of the above create a clear and objective criterion to practices. determine dominance and when it is being abused. 2.Moving on to exclusive agreements, these are not exactly anti-competitive but they raise Conclusion: competition concerns when they are used as an Collecting from the above viewpoints, we reach exclusionary tactic to block entry. No enterprise to the conclusion that India even after the recent or person shall enter into any agreement in amendments in place, we still need to upgrade respect of production, supply, distribution, our competition laws and for that we could gain storage, acquisition or control of goods or from Hong Kong and their National Competition providing services, which causes an adverse Policy that can take care of the entire puzzle. It is effect on competition within India. Any also important to introduce a concrete “Market agreement entered into, which contravenes the Share Test” like other jurisdictions such as South above, shall be void. In the case of Mohit Africa where more than 45% market share is Manglani v. Flipkart India Pvt Ltd, the question considered dominant, whereas in Israel more was whether Chetan Bhagat’s book ‘Half than 50% market share is considered as Girlfriend’ which was available exclusively on dominant. Owing to the growth of e-commerce Flipkart was abuse of dominant position or not, industry, there is a need to amend laws and the CCI opined it was not. In the case of Delhi upgrade competition rules to address these grey Mahavyapar Sangh v. Flipkart Internet Pvt Ltd, areas of competition issues prevailing in this age the question was whether the many instances of of digital economy. vertical agreements between Flipkart and their preferred sellers on the platform were an abuse Our product SimplyTransact is just meant for or not. Here the CCI held it was. you. Please reach out to our Product Head– Ms. Shilpa Agarwal at the mail 3.Another interesting question is whether companies that give deep discounts or sell at ID shilpa@simplybiz.in or SimplyTransact@sim plyBiz.in to know more. below-cost prices are wrong in the eyes of the law. Section 4 of the Act defines ‘predatory price’ as the price that is below the cost of goods or services, such predatory pricing is prohibited only if done by a company that has a dominant position. Hence, the practice of predatory pricing as a matter of law would become inapplicable if the company is not dominant. This too falls within the grey area. This also tells us that the determination of dominance always boils down to the