Law Of Abuse Of Dominance In The United States Of America And India

Law of abuse of dominance is that branch of competition law that deals with monopolisation in the market. Abuse of dominance may range from predatory behaviour by firms in isolated local markets for low-technology products such as industrial waste collection to high-tech industries such as telecom and networking in which ingress to a network is restricted for anticompetitive purposes. Law relating to abuse of dominance holds special significance in transition economies such as India because it may have an important role to play in addressing anticompetitive practices that entrench former state-owned monopoly enter- prises. 

Competition law provisions relating to abuse of dominance around the world have several common elements namely defining of the relevant market in which the possible abuse is realised, establishing the existence of a dominant position by a firm or group of firms and lastly identifying specific practices that may be harmful to competition and assessing their overall effects in the relevant market(s). However the content and application of the elements that have been stated herein vary among different countries. For example some countries' laws specify that a dominant position may be inferred is most of the cases on the basis of a large market share. On the other hand some countries' statutes require consideration of entry conditions and other factors that influence the ability of firms with large market shares to exercise market power. Moreover in some countries the mere charging of high prices or the carrying out of other deceitful acts maybe treated as abuses, while in others the law treats  exclusionary conduct by firms as anti-competitive. 

In extreme cases there may be efforts by incumbent firms to deter entry to potential rivals, which may extend to outright criminal conduct for example, threats to the safety of individuals or corporate facilities, extortion, and so on. While sometimes abuse of a dominant position may also relate to industries that are natural monopolies that is those who have the exclusive privilege of selling a commodity. Such industries may include electricity transmission, natural gas distribution, and, possibly, parts of telecommunications and transportation. It is in this context that the present research paper delves and attempts to answer questions relating to and connected with the law of abuse of dominance in the United States of America and India.

In order to understand the complete meaning of abuse of dominant position, it is essential to divide the term into two parts that is ‘abuse’ and ‘dominant position’, establish the meaning of these two terms and then understand the complete meaning of ‘abuse of dominant position’. Abuse in its literal sense means misuse that is using a certain position for something which it is not intended. The word ‘abuse’ has a very wide meaning everything which is contrary to good order established by usage. The abuse or misuse of its franchises by a corporation signifies any positive act in violation of the charter and in derogation of public right, wilfully done or caused to be done; the use of rights or franchises as a pretext for wrongs and injuries to the public. Abuse also means to make excessive or improper use of a thing, or to employ it in a manner contrary to the natural or legal rules for its use; to make an extravagant or excessive use, as to abuse one's authority. In this context abusive behaviour consists mainly of exclusionary practices as predatory pricing, exclusive dealing, refusal to supply, and tying.

When we talk about dominant position, it refers to a situation where an enterprise, either by itself or acting together with a few other enterprises, is in a position to control the relevant market for a particular good or service or group of goods or services. Dominant position relates to a position of economic strength enjoyed by an undertaking, which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumers. Such a position does not preclude some competition, which it does where there is a monopoly or quasi-monopoly, but enables the undertaking, which profits by it, if not to determine, at least to have an appreciable influence on the conditions under which that competition will develop, and in any case to act largely in disregard of it so long as such conduct does not operate to its detriment. 

Keeping the above in mind, abuse of dominance means a behaviour in which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition. It is important to note that while investigating an alleged abusive practice the investigating agency should obtain information from various sources which includes customers of the dominant firm, rivals of the dominant firm, government officials who regulate some aspect of the dominant firm's behaviour, competition officials in other countries, and officials representing the dominant firm. 

Thus typically three questions arise in cases of Abuse of Dominance: a) What is the relevant market in which the dominance/abuse is alleged? b) Is the enterprise dominant in the relevant market? c) What are the specific indicted practices and do these amount to abuse?

On an objective analysis it can be concluded that the law relating to abuse of dominance in the United States of America and India are similar on many parameters and it can even be stated with caution that the law in the United States is the precursor of the Indian law. However there are certain differences in the law of abuse of dominance in the above-stated countries which relate to the definition of various terms such as abuse of dominance or monopolisation, relevant market etc. While the law of United States is silent on the subject, the Indian law defines the said terms in a comprehensive and extensive manner. Another major difference relates to exemptions under the relevant laws of the two countries. While the Indian law covers all the entities whether state-run or not, the law of the United States exempts Federal government entities. It can thus be concluded that law relating to abuse of dominance of the countries above-stated are similar on some fundamental issues and differ only on subsidiary matters such as definitions, exemptions, enforcement authorities, defences available and sanctions and remedies.