Introduction

Contemporary antitrust laws strive to maintain a balance between fostering a conducive business environment, and regulating business conduct detrimental to competition. Testing this balance is the Collective Dominance doctrine, evolved in the European Union for the prosecution of parallel and independent business conduct leading to foreclosure of competition. In oligopolies – which have increasingly become contemporary realities for most markets in developing economies such as India, this problem manifests not as explicit collusion but through parallel ‘independent’ conduct in concentrated markets, causing foreclosure of competition. India’s Competition Commission (“CCI”) has repeatedly refused to entertain cases involving abuse of collective dominance citing statutory inability. Similarly, the Competition Law Review Committee (2019) in its report, rejected the application of the doctrine citing its lack of enforcement success in the EU and the nascency of the Competition Act, 2002. However, this aversion has facilitated an enforcement gap: where the CCI is rendered toothless in face of foreclosure from parallel, independent decisions in tight oligopolies. Unless caused by a single enterprise holding a dominant position, such harm is completely out of the purview of the CCI.

Part I of this two-part series shall explore the origins and evolution of the doctrine in the European Union, then attempt to briefly walk through the international reception of this concept and conclude with India’s engagement with the doctrine: the various attempts at its inclusion and broader perspective of India’s lawmakers and judiciary. 

Broadly, this article shall serve as a call for reconsideration of India’s aversion to the doctrine, by assessing conventional antitrust tools and their effectiveness in concentrated markets through case studies in Part II. 

Origin and Evolution of the Doctrine

Article 102 of the Treaty on the Functioning of the European Union (TFEU) punishes the abuse of dominant position held by “one or more undertakings”, and has been so since its inception as Article 86 of the EEC Treaty. However, it was not until Italian Flat Glass (Società Italiana Vetro SpA v. Commission) that the doctrine received judicial recognition when the General Court of the EU accepted the possibility of joint or collective dominance. The Court clarified that prosecution pertaining to collective dominance under Article 102 requires market analysis, clear economic links, proof of dominance and abuse - distinct from concerted practices under Article 101. 

The doctrine was further crystalized via Compagnie Maritime Belge v. Commission (“CMB”) where the Commission investigated a complaint involving shipping companies which collectively abused their dominant position by entering into exclusive agreements and engaging in predatory discounting. The Court held the companies liable for abuse of their collective dominance under Art. 82 of the EC Treaty (presently a.102 of TFEU). It laid down the definition of collective dominance as a situation wherein two or more legally distinct undertakings act as one economic entity. The Court held that the existence of collective dominance does not require formal agreements or corporate links; and the same may be inferred from economic links, including the market structure, and the interdependent behaviour of undertakings. Significantly, it held that the same conduct can lead to simultaneous liability under both a.81 and a.82 (presently a.101 & 102 of TFEU) provided that it satisfies the conditions within both these provisions. It also held that not just economic links, but ‘connecting factors’ are also necessary to establish collective dominance, such as analysis of market structures and economic assessments. 

The doctrine was further expanded in Airtours plc v. Commission (“Airtours”) where its scope was significantly broadened and the test to establish collective dominance was also laid down. The case related to a proposed acquisition between tour-operators. The Commission, while reviewing the acquisition denied permission for the same,citing the possibility of impeding effective competition by creating a situation of abuse of collective dominance. This decision was challenged before the Court of First Instance (presently, the General Court). In its judgement, the Court accepted that the collective dominance doctrine could be applied to the EU Merger Control Regulation, and inferred the phrase “dominant position” as used in the regulation to include collective dominance,thereby paving way for ex-ante application of the doctrine in merger control contexts, affirming Gencor v. Commission and France v. Commission.      

This marked a significant departure from the conventional ex-post application for abuse of dominance. It was also observed that a collective dominant position may emerge from a concentration where it becomes economically rational and preferable for each member of an oligopoly to adopt a common course of conduct, without the need for a formal agreement      or concerted practice under Article 81 EC, lacking effective constraints from competitors, customers, or consumers. The Court also laid down a three-pronged test for determining establishment of a collective dominant position: requiring transparency, deterrence from deviation, and lack of effective competitive constraints. 

International Reception 

While the Collective Dominance doctrine has been adopted by many countries worldwide, including major antitrust jurisdictions such as the United Kingdom and Singapore, its enforcement success has been lacklustre in these jurisdictions. 

For instance, in the United Kingdom the Competition Act, 1998’s Chapter II Prohibition applies to abuse by “one or more undertakings” in a dominant position (similar to a. 102). UK Courts have also consistently held that separate firms can hold a collective dominant position if they are “linked in such a way that they adopt a common policy on the market.” In practice, however, collective dominance findings are rare in the UK, no case to date has definitively held a group of independent companies liable under the provision for the abuse of collective dominance. UK’s antitrust enforcement against oligopolistic tacit coordination has thus far relied on traditional anti-cartelization rules, founded on proof of agreement or concert, and the collective dominance doctrine remains largely a relic from the EU, inherited during the pre-Brexit era.

In Singapore too, the Competition Act prohibits any undertaking from abusing a dominant position, and it specifies that this can be done by “one or more undertakings”: which the Competition and Consumer Commission of Singapore (CCCS) expressly acknowledges in its Section 47 Guidelines. Despite this incorporation, no enforcement action to date has applied or tested the collective dominance doctrine before the CCCS or the courts.

Some major antitrust jurisdictions have adopted a different approach. Instead of imposing such broad liabilities via collective dominance, they have chosen to prioritise the freedom of business while preventing agreements using existing ex-post antitrust tools. 

For instance, Australian antitrust law does not incorporate the doctrine of collective dominance. The Competition and Consumer Act, 2010 (“CCA”) addresses abuse of market power (formerly, “misuse of market power”) by firms with a “substantial degree of power in a market”, which is generally applicable to single firms. 

But perhaps the most significant example is the United States (the birthplace of modern antitrust laws). Section 2 of the Sherman Act, which punishes monopolization or attempted monopolization (abuse of dominance in EU parlance) does not recognize the concept of joint or collective dominance. The Supreme Court in Brunswick Corp v. Pueblo Bowl-O-Mat Inc, emphasized that the Section 2 of the Sherman Act was intended for the protection of competition, and not competitors. Thus rendering any act by a non-dominant entity out of the purview of the Act. The Ninth Circuit, for instance, in Rebel Oil Co., Inc. v. Atlantic Richfield Co., recognized that the present nature of Section 2 may allow oligopolies to evade Sherman Act prohibitions, however refused to endorse a collective dominance interpretation citing the need for legislative (congressional) action. Thus, the US has refused to adopt the doctrine, highlighting the need to balance antitrust actions with the ease of doing business. 

The Indian Collective Dominance Odyssey 

Presently, India’s Competition Act, 2002 does not recognize the concept of collective dominance. Section 4(1) of the Act reads, “No enterprise or group shall abuse its dominant position” – thus applicable only to an enterprise or a group of enterprises having common ownership. The CCI has repeatedly cited this statutory inability to prosecute any joint or collective dominance cases in cases of predatory pricing or exclusive agreements by non-dominant entities. (See for instance: Meru v. ANI Technologies, and Neeraj Malhotra v. DeutschePost Bank Home Finance) 

Over these years, there have been several attempts at the inclusion of the doctrine of collective dominance. The earliest, was via the introduction of The Competition (Amendment) Bill in 2012 barely four years after Section 4 was brought into effect. The bill sought to insert the phrase ‘jointly or singly’ in Section 4 such that it would read “(1) No enterprise or group, jointly or singly, shall abuse its dominant position”. It was subsequently referred to the Standing Committee on Finance for revisions. While the 83^rd Standing Committee on Finance, via its report, did deliberate upon the issue, the matter subsequently lost its momentum as the (then) incumbent government lost power. 

The debate around collective dominance in India was resurrected with the constitution of the competition Law Review Committee by the Ministry of Corporate Affairs in September 2018. The Committee analysed the doctrine’s success in the EU, as well as the UK and Singapore. It also analysed the OECD’s commentary on the concept of Collective Dominance, which also signalled the doctrine’s lack of success in the EU and UK. It also took the view that any  collective’ action harming competition was sufficiently punishable under existent provisions, such as Section 3 of the Act. Moreover, the Committee highlighted the limited global adoption and lacklustre enforcement in jurisdictions which have adopted it, concluding that India need not adopt the doctrine at this stage.

About the Author

The author is a Ist year B.A., LL.B. (Hons.) Student at NALSAR University of Law, Hyderabad. He may be contacted at ssjoshi@nalsar.ac.in