Saint Gobain abuse of dominance matter: Excess of Consideration

 

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An abuse of dominance allegation was filed by M/s. HNG Float Glass Ltd. against M/s. Saint Gobain Glass India Ltd. (Saint Gobain) with the Competition Commission of India. It was alleged that Saint Gobain was abusing its dominant position by charging unreasonably low prices, bundling sales and arm twisting dealers. The Commission after careful deliberation and discussion found that Saint Gobain was not in a dominant position in the relevant market of ‘production and sale of clear float glass’. Despite holding that Saint Gobain was not in a dominant position, the Commission still chose to deliberate upon any possibility of anti-competitive conduct. The order of the commission can be accessed here.

Was there any need to further deliberate upon the anti-competitive conduct, if any?

Once it has been decided that an enterprise is not in a dominant position, it is meaningless to deliberate whether the said enterprise has carried out any unilateral anti-competitive conduct or not. Section 4 of the Competition Act, 2002 provides that no enterprise shall abuse its dominant position. A perfectly legitimate business conduct may become an abuse if the same is performed/carried out by a dominant enterprise. If the enterprise is not dominant then even though its unilateral business conduct may be unfair or unreasonable, it is not deemed to be anti-competitive or unlawful under the competition laws. Alleged unilateral acts of predatory pricing, tying, bundling, refusal to deal etc. are only abusive if the same are carried out by a dominant enterprise and not when carried out by a non-dominant enterprise. The reason being that there are lot of competitive constraints on the non-dominant enterprises in the relevant market. If the non-dominant enterprises indulge in unfair or unreasonable acts then it is probable that its consumers/customers may switch to some other competitor. Further, the presence of a number of other competitors in the relevant market continuously exert a competitive constraint on the non-dominant undertaking to conduct its business in the most efficient manner. Once it had been proved that Saint Gobain was not in a dominant position, i fail to understand as to why the Commission chose to deliberate upon and discuss the alleged abuses. This view was also taken by Ms. Geeta Gouri (Member of the Commission) in her supplementary order. She rightfully pointed out that the analysis of abuse after concluding that Saint Gobain was not in a dominant position was unwarranted. The supplementary order can be accessed here.

The reason as to why certain business practices may become unlawful if the same are performed by a Dominant enterprise is due to lack of competitive constraints on the said enterprise. Dominant enterprises are able to conduct their activities independently of the competitive forces in the relevant market.  The Court of Justice of the European Union in the matter of United Brands vs. Commission, stated that “a position of dominance 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 giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers”. A dominant enterprise has a special responsibility not to allow its conduct to impair genuine undistorted competition in the market. 

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