Abuse of Dominance

What is Abuse of Dominance?

Abuse of dominance occurs when a dominant undertaking exploits its market power to engage in conduct that distorts competition or harms the competitive process, rather than competing on merits. Abuse of dominance is prohibited in most jurisdictions under competition laws and regulations, and its assessment generally follows a rule of reason approach due to the potentially ambiguous or context-dependent nature of its effects.

Dominance, as defined in Section 4 of the Competition Act, 2002, refers to a position of strength enjoyed by an enterprise in the relevant market, which enables it to operate independently of competitive pressures or to affect its competitors or consumers in its favour. The statutory use of the term 'abuse' distinguishes legitimate competitive advantages from behaviour that undermines market fairness. Through multiple orders, judgments, and reports, Indian courts, CCI, and the government have clarified that enjoying a dominant position in itself is not unlawful, so long as such dominance is not abused to distort competition or appreciably affect the competitive process in India.

Official definition of Abuse of Dominance

'Abuse of Dominance' as defined in legislation

Definition under the Competition Act, 2002.

Section 4, of the Competition Act, 2002, lays out what constitutes an abuse of the dominant position and explains what is a dominant position. Explanation (a) of section 4 defines the dominant position as a position of strength, enjoyed by an enterprise, in the relevant market, in India, 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 favor. The definition is similar to those in the competition laws of several other jurisdictions, such as the European Union and the United Kingdom.

Section 4 of the Act also prohibits any enterprise or group from abusing its dominant position in the relevant market, with the objective of preventing anti-competitive practices and safeguarding consumer interests. Holding a dominant position is not illegal per se; however, the abuse of such a position is prohibited. Section 4(2) enumerates several practices that constitute abuse of dominance, including directly or indirectly imposing unfair or discriminatory conditions or prices in the purchase or sale of goods or services, limiting or restricting production, supply, or technical development to the prejudice of consumers, denying market access to other enterprises in any manner, making the conclusion of contracts subject to acceptance of supplementary obligations unrelated to the subject of the contract (tying or bundling), or using dominance in one market to enter or protect another relevant market (leveraging).

Under section 4, in addition to individual companies and businesses, groups are also potential violators. A group is defined in Section 5 of the Act as two or more enterprises where one enterprise is directly or indirectly in a position to:

(i) exercise twenty-six percent or more of the voting rights in the other enterprise; or

(ii) appoint more than fifty percent of the members of the board of directors of the other enterprise; or

(iii) control the management or affairs of the other enterprise

A group can abuse its dominant position when, collectively or through control, it uses its combined market power to engage in anti-competitive conduct. The Competition Commission of India assesses the market power and conduct of the entire group rather than individual entities alone, preventing circumvention of competition law through related enterprises under common control. This makes groups liable for abuse of dominance if their coordinated actions harm competition or consumers.

Legal provision(s) relating to 'Abuse of Dominance'

Dominance always assessed in a Relevant Market

The definition of relevant market is provided under Section 2(r) which states that the market which may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets. Section 2(s) further defines the relevant geographic market as a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas. And lastly, Section 2(t) defines the relevant product market as a market comprising of all those products or services which are regarded as inter-changeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use; or the production or supply of, which are regarded as inter-changeable or substitutable by the supplier, by reason of the ease of switching production between such products and services and marketing them in the short term without incurring significant additional costs or risks in response to small and permanent changes in relative prices. The concept of dominance is always assessed with respect to a defined relevant market, enabling the dominant position to be meaningfully evaluated within these market boundaries.

Criteria for Determining Dominant Position

Section 19(4), of the Competition Act, 2002, lays out the factors to be considered while while inquiring whether an enterprise enjoys a dominant position or not under section 4. The aforementioned factors are as follows:

• 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
• Monopoly or dominant position whether acquired as a result of any
• Statute or by virtue of being a Government company or a public sector
• Undertaking or otherwise
• 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 advantage, by way of the contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have an appreciable adverse effect on competition.
• Any other any other factor which the Commission may consider relevant for the inquiry.

What constitutes an abuse of dominance

Section 4(2) of the Act provides the following activities that may constitute abuse of dominance:

• Imposing unfair or discriminatory conditions in the purchase or sale of goods or services.
• Charging unfair or discriminatory prices (including predatory pricing aimed at eliminating competition).
• Limiting or restricting production, supply, or technical/scientific development to the detriment of consumers.
• Denying market access to competitors or potential entrants.
• Making the conclusion of contracts conditional on acceptance of unrelated obligations (tying or bundling).
• Using dominance in one market to enter or protect another market (leveraging dominance).
• Exclusive dealing arrangements that restrict consumers or suppliers from dealing with competitors.
• Foreclosure of competitors through restrictive practices or controlling essential facilities.

'Abuse of Dominance' as defined in International Instrument(s)

European Union (EU)

Article 102 of the Treaty on the Functioning of the European Union (TFEU) explicitly defines and regulates abuse of dominance:

"Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

International Competition Network (ICN)

International Competition Network (ICN) is a network of competition agencies worldwide. In the Unilateral Conduct Workbook (2009), ICN defines dominance as "the ability of a firm or group of firms to profitably maintain prices above competitive levels for a significant period of time." For abuse of dominance analysis, the ICN encourages:

1. Effects-based analysis
2. Avoidance of over-enforcement
3. Focus on consumer harm

Organisation for Economic Co-operation and Development (OECD) Guideline

The OECD's Competition Assessment Toolkit discusses market power and dominance in terms of: "The ability to raise prices or exclude competitors without losing market share." It treats dominance primarily as an economic concept, rooted in market share, buyer power, and competitive constraints. Similar to ICN, it also suggests an effect-based approach for abuse of dominance analysis.

'Abuse of Dominance' as explained in official government report(s)

Market Study on Telecom Sector in India (2021)

In Market Study on Telecom Sector in India (2021) report, the CCI reiterates the definition under the Competition Act, 2002, and explains it as: “A dominant position refers to a position of strength enjoyed by an enterprise that gives it the power to operate independently of competitive forces or influence market conditions in its favour. It is not dominance per se, but the abuse of such position that is prohibited.” The report emphasizes the economic strength of an enterprise as well as its ability to affect competition, consumers, or the market. It also clarifies that high market share alone is not conclusive, and factors such as entry barriers, countervailing buyer power, and market structure are taken into account.

Case Laws Regarding Abuse of Dominance

Belaire Owners' Association v. DLF Ltd

Belaire Owners' Association v. DLF Ltd. is recognized as the first major abuse-of-dominance decision under Section 4 of the Competition Act, setting an early benchmark for real estate enforcement. The CCI defined the relevant market as developer/builder services for high-end residential apartments in Gurgaon and held DLF dominant due to strong brand presence, scale, and buyer dependence. It found that DLF imposed unfair and one-sided terms in non-negotiable Apartment Buyer Agreements, including unilateral changes to project plans, restrictive exit options, unequal delay penalties, and broad forfeiture clauses, amounting to abuse under Section 4(2)(a)(i). CCI imposed a ₹630 crore penalty, issued cease-and-desist directions, and required clause-level modifications to remove abusive terms. DLF contested the market definition and denied wrongdoing, arguing contractual consent and absence of exclusionary effects. However, the COMPAT upheld the CCI’s findings and penalty, and the Supreme Court required DLF to deposit the penalty to pursue its appeal—reinforcing the case’s significance in establishing that dominance combined with exploitative contract conditions in a city-segment market can constitute abuse in the real estate sector.

Coal India v. CCI

The Supreme Court, in Coal India Ltd. v. CCI, provided a comprehensive overview of the definition and meaning of the dominant position. It observed that dominant position means a position of strength enjoyed by the enterprise in the relevant market which in turn involves adverting to the relevant geographic market or the relevant product market or both as defined and it should enable the enterprise to enjoy the position of strength to operate independently of competitive forces prevailing in the market. The Court highlighted that the assessment of abuse involves a fact-specific inquiry, focusing on whether the conduct of the dominant firm has the effect of stifling competition or exploiting consumers unfairly. The Court also reiterated that not every act of a dominant firm that disadvantages competitors is abuse; rather, the conduct must be objectively unfair or exclusionary, such as imposing unfair prices, limiting production, or denying market access. The test for abuse includes examining the intent of the dominant firm and the consequences of its conduct on the market.

Uber v. CCI

The Supreme Court, in Uber (India) Systems (P) Ltd. v. CCI, observed that predatory pricing is not only an abuse of a dominant position but also evidence of having a dominant position. The Court took a nuanced approach to abuse of dominance analysis under the Competition Act, 2002. The Court reaffirmed that dominance itself is not unlawful; the focus is on whether the dominant entity’s conduct amounts to an abuse that adversely affects competition. The Court emphasized contextual evaluation, considering the nature of the market, business realities, and the impact on competition rather than just competitors. In Uber’s case, the Court examined whether certain contractual and operational practices by Uber amounted to unfair or exclusionary conduct under Section 4. Significantly, the Court stressed that the assessment should be forward-looking and balance the objectives of fostering competition while enabling innovative business models. It recognized the dynamic and evolving nature of platform markets and cautioned against rigid application of traditional competition principles leading to unintended consequences.

Matrimony.com & CUTS v. Google

In Matrimony.com & CUTS v Google, the Competition Commission of India (CCI) conducted an investigation against Google based on complaints filed by Matrimony.com and Consumer Unity & Trust Society (CUTS). The allegations included abuse of dominant position by Google in the market for online search and search advertising services. CCI found that Google abused its dominant position by favoring its own vertical search services in general search results and imposing restrictive exclusivity clauses on third-party websites. Google’s lack of transparency and unfair practices in search advertising were also held to harm competition.

Umar Javeed v. Google

In Umar Javeed v. Google LLC, the CCI uniquely addressed abuse of dominance within an ecosystem market, focusing on Google's dominance in the Android Mobile Device ecosystem in India. The Commission scrutinized Google's bundling of the entire Google Mobile Services suite as a restrictive tie-in that limited competition from rival app developers and constrained market access. By recognizing the interconnected nature of platform-based ecosystems and network effects, CCI extended competition law analysis beyond isolated products to the broader ecosystem dynamics. This marked a significant development in Indian competition jurisprudence by emphasizing the need to protect competitive conditions within network markets and digital ecosystems.

Research engaging with Abuse of Dominance

Abuse of Dominance in Digital Markets by OECD (2020)

This note by an OECD secretariat highlights how traditional competition law tools must be adapted for the unique features of digital ecosystems, such as network effects, multi-sided markets, and zero-price offerings. It categorizes key abusive conducts, including refusal to deal, tying and bundling, predatory pricing, and exploitative abuses, emphasizing the importance of economic analysis tailored to digital market dynamics. The report also discusses novel theories of harm like forced free riding and abusive leveraging, reflecting digital platforms’ complex interactions and potential for self-preferencing.

Abuse of Dominance in Digital Platforms by T Raychaudhuri (2020)

This paper critically analyses enforcement challenges of competition law in digital platform markets in India, focusing on dominance and abuse assessment following the 2019 Supreme Court judgment in the Uber case. It highlights the inconsistency between the Supreme Court’s view that loss-making pricing can indicate dominance and CCI’s caution against such circular reasoning, noting that conflicting interpretations undermine legal certainty. The author argues that while competition law must be flexible to innovation, it cannot be uncertain or unpredictable. The paper calls for urgent clarifications and guidelines to address unresolved issues in digital platform abuse jurisprudence to prevent incoherence in the law.

Abuse of dominance: has the effects-based analysis gone too far? by D Geradin & S Huijts (2024)

This paper in the Oxford Review of Economic Policy critiques the European Commission’s shift in 2008 from a formalistic to an effects-based approach in abuse of dominance cases, including the use of the as-efficient competitor (AEC) test for exclusionary pricing. The authors argue that rigid application of this effects-based analysis has sometimes led to prolonged investigations and challenges in achieving effective enforcement outcomes, particularly in complex digital markets. These difficulties have contributed to the adoption of ex ante regulatory measures like the Digital Markets Act. The paper questions whether ex ante regulation effectively addresses these enforcement gaps and offers recommendations for how the Commission might better balance effects-based analysis with practical regulatory tools.

International Experiences

United States

The United States approaches abuse of dominance under Section 2 of the Sherman Act, traditionally requiring plaintiffs to prove (i) monopoly power in a defined relevant market and (ii) willful acquisition or maintenance of that power through exclusionary or anticompetitive conduct. The US framework is grounded in the consumer welfare standard, emphasizing concrete evidence of harm such as price increases, output reduction, or diminished innovation.

US courts adopt a stringent rule-of-reason analysis for exclusionary conduct, often demanding rigorous economic evidence including market definition, market power metrics (e.g., SSNIP tests, market shares), and proof of anticompetitive effects rather than mere market dominance or strategic behavior. This results in a high bar for establishing abuse, reflecting judicial skepticism toward regulating conduct absent demonstrable consumer harm.

In emergent and technology-driven markets, the US antitrust agencies (FTC and DOJ) employ nuanced, effects-based analyses that consider dynamic competition, network effects, and multi-sided platforms. For example, assessment of tying or bundling focuses on foreclosure effects and foreclosure thresholds; leveraging abuses require showing harm in a secondary market beyond normal competition.

Recent enforcement, including investigations into major digital platforms, increasingly pivots on novel economic theories such as input foreclosure, self-preferencing, and data dominance, yet courts maintain demands for clear causal links to anticompetitive outcomes. The US approach balances deterrence of harmful monopoly conduct with recognition of innovation incentives intrinsic to dominant technology firms, thereby limiting overreach in rapidly evolving digital ecosystems.

European Union

The European Union’s approach to abuse of dominance under Article 102 TFEU is distinctly more interventionist compared to the US framework, reflecting its ordoliberal and market-structuralist heritage. While the US emphasizes the consumer welfare standard and requires stringent proof of anticompetitive effects, the EU adopts a broader concept of abuse encompassing both exclusionary and exploitative practices that undermine market structure and competitive process, not solely consumer prices or output. The ordoliberal tradition, emphasizing a competitive order maintained through strong state oversight to prevent market failure and preserve plurality, underpins this stance. This contrasts with the US Chicago School legacy valuing minimal intervention and efficiency as guiding principles.

EU enforcement leverages a hybrid analysis that combines effects-based scrutiny with a more expansive structural assessment of market power and dominance, accounting for market concentration, barriers to entry, and potential to distort competition. The Commission employs presumptions of dominance based on high market shares (often above 40-50%) and actively regulates conduct considered exploitative per se (e.g., excessive pricing, loyalty rebates), reflecting a prophylactic stance absent in US jurisprudence. Emerging digital market enforcement in the EU incorporates novel theories such as leveraging dominance through self-preferencing or gatekeeper roles, with a willingness to impose structural remedies and even ex ante regulations (e.g., Digital Markets Act) reflecting proactive intervention principles.

Issues and Challenges

Market Definition Complexity

Precisely delineating the relevant product and geographic markets is foundational yet increasingly difficult, especially in digital and multi-sided markets where products and services are interconnected, and consumer behavior is dynamic. Ambiguous or overly narrow market definitions risk misclassifying dominance or masking competitive constraints, while overly broad definitions dilute enforcement focus, thereby complicating the accurate assessment of market power and potential abuse. Modern approaches seek flexible, evidence-based market definition that accounts for substitutability, cross-market interactions, and indirect network effects.

Assessment of Dominance

Quantifying dominance involves overcoming challenges inherent to network externalities, economies of scale, multi-homing users, and platform ecosystems, where traditional proxies like market share do not fully capture competitive strength. Dominance assessment must incorporate nuanced analyses including market structural factors, dynamic potential competition, and temporal variations in market power, requiring sophisticated economic modelling and contextual understanding rather than reliance on static numerical thresholds.

Evolving Market Dynamics

Rapid innovation, shifting consumer preferences, and entry of disruptive technologies create highly fluid market conditions, meaning dominance and abuse potential must be evaluated with a forward-looking perspective. Static legal doctrines predicated on mature, segmented markets often fail to account for dynamic competitive interactions, transformation of value chains, and the role of data and algorithms, necessitating adaptive legal and economic frameworks that balance enforcement with innovation encouragement.

Economic Evidence Requirements

Robust effects-based enforcement demands comprehensive, high-quality data and advanced econometric methodologies to demonstrate exclusionary or exploitative conduct and their competitive effects. Challenges include identifying causal links amidst confounding market factors, measuring subtle harms such as innovation suppression or choice restriction, and managing evidentiary limitations due to proprietary data or technical opacity of digital markets, necessitating investment in regulatory capacity and expertise.

Distinguishing Legitimate Competition vs Abuse

Courts and authorities face complex judgment calls in differentiating aggressive competition that benefits consumers from exclusionary or predatory behaviors intended to maintain or extend dominance artificially. This requires careful consideration of business justifications, efficiency gains, and the pro-competitive rationale underlying conduct such as pricing strategies, product bundling, or refusal to deal, avoiding regulatory overreach that could stifle legitimate innovation.

Multi-Market and Ecosystem Effects

Dominance deployed across interrelated product and service ecosystems necessitates holistic evaluation of leveraging, bundling, and network effects that may foreclose competition in secondary markets or adjacent domains. Such systemic abuses require complex theoretical models and cross-market data analysis to uncover cumulative impacts and feedback loops, stretching traditional antitrust tools and demanding careful policy calibration.

Resource and Expertise Constraints

Technical complexity and data-intensive investigations demand specialized economic, legal, and IT expertise within competition authorities. Limited institutional resources and technology challenges constrain thorough market analysis and increase reliance on external consultants, underscoring the need for capacity building and continuous knowledge upgrading.