Existence of large number of competitors in the market, does not entitle dominant position: CCI [Case Brief]

A firm is said to be in the dominant position if it behaves independently of its competitors, suppliers, customers and the consumers. Such company can restrict the competition if it has the position of strength in the given market. However, a dominant position is not in itself anti-competitive but it is only when the company uses this strength to reduce the competition it is considered to have abused this dominant position.

RAKESH SANGHI v. BENNETT, COLEMAN & COMPANY LTD & ANR

Forum: Competition Commission of India

Case No.: 89 of 2016

Bench: Devender Kumar Sikri, S. L. Bunker, Sudhir Mital, Augustine Peter, U. C. Nahta, Justice G. P. Mittal.

Decided on: 05/12/2016

Relevant Provisions:

1. Section 19(1)(a), 26(2) of the Competition Act, 2002.
2. Section 4 of the Competition Act, 2002

Brief facts: Present information was filed under section 19(1)(a) of the Competition Act, 2002 against two of the leading media publication conglomerates i.e. Bennett Coleman and Deccan Chronicle for violation of section 4 of the Act for charging extraordinarily high amount for non-commercial publications such as legal notices.

Issue: Whether charging an extraordinarily higher amount for publication of legal or public notices could amount to an abuse of dominant position under section 4 of the Competition Act.

Arguments of Informant:

  1. These two newspaper media companies have a circulation of 2, 55,600 and 3, 00,000 respectively, which gives them a dominant position in the twin cities of Hyderabad and Secunderabad in English daily newspaper market.
  2. A publication of legal notice in a newspaper is an essential commodity because anybody who purchases or sells have to advertise the cautioning for all interested parties.
  3. The rates quoted by the defendants are much higher than other publishers such as “The Hindu” and The Indian Express”. Also, defendant companies in other cities charge only 50% of the amount.
  4. Defendant companies did not respond to the notice of informant which asked for the manner in which they calculate their advertising rates.

Decision: The defendant companies are not in a dominant position hence the matter is closed under the provisions of section 26(2) of the Act.

Held: A company cannot be said to have to abuse the dominance of position if it’s charging higher prices for publication of legal notices in newspapers when a large number of competitors are present in the market.

Ratio:

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