Competition law does not recognize collective abuse of dominance

“.........It further observed that Indian law does not recognize collective abuse of
dominance as there is no concept of „collective dominance‟ which has evolved in
jurisdictions such as Europe. The word „group‟ referred to in Section 4 of the Act
does not refer to group of different and completely independent corporate entities
or enterprises. It refers to different enterprises belonging to the same group in
terms of control of management or equity....... But the concept of dominance does
centre on the fact of considerable market power that can be exercised only by a
singly enterprise or a small set of market players.......... It is noteworthy that the
Competition Act uses the article “an” and not “any” before the word
“enterprise” in subsection (2) of Section 4. For a plural interpretation of “an”
the combined entity should be an identifiable artificial juridical person such as
association of persons (AOP) or body of individuals (BOI) mentioned in
subsection (1) of section 2 of the Act. That is why the Act includes the term
“group” separately because a “group” of firms with joint management control
can have collective decision making and can exercise joint dominance. In this
case, the respondents cannot be said to be AOP or BOI. Therefore, they cannot be
said to be “an enterprise” for the purpose of Section 4. 19.1”.
Case No. 78 of 2013
In Re:
Dish TV India Limited
FC – 19, Sector – 16A, Noida -201301, U.P.
............... Informant
And
Hathway Cable & Datacom Limited


CORAM
Mr. Ashok Chawla
Chairperson
Dr. Geeta Gouri
Member
Mr. Anurag Goel
Member
Mr. M. L. Tayal
Member
Mr. S. L. Bunker

ORDER UNDER SECTION 26(2) OF THE COMPETITION ACT, 2002
The Informant is a Direct-to-Home (‘DTH’) operator in India. The Opposite Parties are
Multi System Operators (‘MSOs’), operating in various states in India.
Page 2 of 6
2.
The Informant’s allegations, inter alia, relate to charging of high carriage and placement
fee and under reporting of subscribers by the Opposite Parties, vis.-à-vis. Broadcasters. The
Informant contended that the same amounts to abuse of dominance under the provisions of
Section 4 of the Competition Act, 2002 (the ‘Act’).
3.
The Informant submitted that the Opposite Parties in abuse of their position of
dominance, were forcing broadcasters to pay high carriage and placement fee for carrying and
placing their channels. The payment of such high fees by broadcasters was reducing the Opposite
Party’s net content cost, vis-a vis competitor’s namely DTH operators. By this mode, the MSOs
were destroying the level playing field and the DTH operators were unable to compete despite
having a more efficient technology and a better quality product.
4.
The specific allegations made by the Informant against the Opposite Parties relate to:
i. Charging exorbitantly high carriage fee from broadcasters for carrying the channels on
their cable network;
ii. Charging high placement fee for placement of channels on the desired bandwidth on their
cable network;
iii. Retaining a disproportionate share of the subscription revenue and not allowing its
equitable distribution in the value chain;
iv. Under reporting subscriber numbers, thereby distorting subscription revenue figures;
v. Paying effectively negligible net content cost as compared to its competitors.
5.
Ultimately, the Informant alleged violation of the provisions of Section 4(1) read with
Section 4(2)(a)(i), 4(2)(c) and 4(2)(b)(i) of the Act.

6.
The Informant submitted that it was in direct competition with the Opposite Parties in the
“markets for broadcast carriage services within different states”.
7.
A perusal of the material and information on record shows that the allegations of the
Informant do not pertain to abused of dominance by any one of the Opposite Parties in a specific
geographic region. The Informant has attributed collective dominance to all the Opposite Parties
together, in the geographical markets of their operation and collective abuse. Therefore, the
question is whether Section 4 of the Act, covers abuse of collective dominance. Section 4 of the
Act, provides:
“(1) No enterprise or group shall abuse its dominant position”
...........
Explanation – For the purposes of this section, the expression –
...........
(c) “group” shall have the same meaning as assigned to it in clause
(b) of the Explanation to Section 5.” (Emphasis added)
Further, the Explanation to Section 5 of the Act, defines ‘group’ as follows:
„group‟ means two or more enterprises which, directly or indirectly, are 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 in the
other enterprise; or
iii.
8.
control the management or affairs of the other enterprise;”
Appraisal of Section 4 and 5 makes is abundantly clear that Competition Act, 2002
covers dominance of one enterprise or a group of enterprise (satisfying the conditions laid down
in the proviso to Section 5). The Commission in the case of Consumer Online Foundation

Informant vs. Tata Sky Limited & Ors. (Case 2/2009) covered the aspect of ‘collective
dominance’ and observed:
“.........It further observed that Indian law does not recognize collective abuse of
dominance as there is no concept of „collective dominance‟ which has evolved in
jurisdictions such as Europe. The word „group‟ referred to in Section 4 of the Act
does not refer to group of different and completely independent corporate entities
or enterprises. It refers to different enterprises belonging to the same group in
terms of control of management or equity....... But the concept of dominance does
centre on the fact of considerable market power that can be exercised only by a
singly enterprise or a small set of market players.......... It is noteworthy that the
Competition Act uses the article “an” and not “any” before the word
“enterprise” in subsection (2) of Section 4. For a plural interpretation of “an”
the combined entity should be an identifiable artificial juridical person such as
association of persons (AOP) or body of individuals (BOI) mentioned in
subsection (1) of section 2 of the Act. That is why the Act includes the term
“group” separately because a “group” of firms with joint management control
can have collective decision making and can exercise joint dominance. In this
case, the respondents cannot be said to be AOP or BOI. Therefore, they cannot be
said to be “an enterprise” for the purpose of Section 4. 19.1”.
9.
The cases referred to by the Informant namely General Motors Continental LV vs.
Commission of European Communities, Hoffman-La Roche & Co. AG vs. Commission of
European Communities and Sirena S.r.l & Ors merely refer to broad principles of European
Competition Law, and is not applicable to Indian Competition Act, 2002. Hence the ratio laid
down is not relevant to the facts of present case. USDOJ decision in Merger Approval for merger
of Sirius Satellite Raido Ic. and XM Satellite Radio Inc. is also not relevant to the facts of the
present case.
Page 5 of 6
10.
In view of the above discussion, there does not exist a prima facie case for causing an
investigation to be made by the Director General under Section 26(1) of the Act. It is a fit case
for closure under 26(2) of the Act and the same is hereby closed.
11.
The Secretary is directed to inform the parties accordingly.
New Delhi
Dated: 06/03/2014
Sd/-
(Ashok Chawla)
Chairperson
Sd/-
(Dr. Geeta Gouri)
Member
Sd/-
(Anurag Goel)
Member
Sd/-
(M. L. Tayal)
Member
Sd/-
(S. L. Bunker)
Member
Page 6 of 6

Print Page