Written by Ankur Yadav

Introduction

The legal imagination behind Competition Commission of India’s understanding of “dominance” has become outdated and non-inclusive. The precedents traditionally set by courts and CCI explaining “dominance” under explanation (a), section 4 of Competition Act, 2002, clearly lay down that it is a firm’s ‘ability to operate independently of competitive forces and its market share and resources it control’. This understanding takes root in the old yet prominent case of Mcx Stock Exchange Ltd. & Ors vs National Stock Exchange Of India Ltd, wherein the assumption was established that only large and well-established entities have capabilities to abuse dominance.  

This understanding demands drastic change as per the changing era. These precedents were laid down in the pre-digital era where linear growth and statistics could be mapped easily and an idea of a technology that could consume all statistics seemed alien. CCI still suffers from the judgemental error it did while explaining the “dominance” jurisprudence. This article aims to critique the reasoning adopted by the CCI while pronouncing the judgement for this case and highlights how new market entrants can exploit legislative lacunae, potentially leading to market monopolization in the long run.  

The author’s aim is two-fold here. Firstly, the author tries to identify how CCI committed an error while providing test for “dominance” and how the new-entrants in market are ready to exploit it. Secondly, the paper suggests an approximate test for determining “dominance” in an algorithm and technology driven market.  

Traditional “dominance” and its exploitation 

CCI in the above case gave a brief threshold for determining “dominance”, which was explained as a ‘position of strength enjoyed by an enterprise in the relevant market, enabling it to operate independently of competitive forces or influence competitors, consumers, or the relevant market’. This threshold was relevant for many years and provided a checklist that needed to be ticked for a company to be considered as a “dominant” company or a firm. However, it took not long for this threshold to be rendered invalid in the face of new-entities in the contemporary algorithm-and-technology driven market. In an article by P&A Law Offices on Lexology on ‘In Review: Abuse of Dominance in India’, it was claimed that such companies have evaded this “dominance” label despite their influence or market share by operating outside the unchecked parameters of what has been considered as important factors for determining dominance. A solid backing by powerful parent companies and already having financial and technological advancements help such companies attain a position of power, even though such influence and power is not exactly covered under the ambit of the definition that was stated in aforementioned case. An appropriate example of this non-traditional powerful company is, Jio. It entered the market in September, 2016 and used aggressive pricing and brutal market strategies to gain a huge consumer base. Its usage of ‘below-cost’ entry was not considered predatory but as a “introductory pricing”. Further, the TRAI had held that Jio’s free and cheap plans were promotional offers allowed under its tariff rules (with a 90 day limit), as provided under the section 11(2) of the Telecom Regulatory Authority of India Act, 1997 and Telecom Tariff Order, 1999 (especially 2002 and 2004 amendments). It offered free voice calls and cheap data, attracting a large user base and drawing many customers away from existing telecom providers. This aggressive pricing was a result of existing deep pockets of its parent company, Reliance. Technically, according to set precedents of MCX Case and the legal statute of Section 19(4) of Competition Act, 2002, Jio did not hold a dominant position as such. But, its capacity to reshape market dynamics and exert out-sized influence raised concerns about whether such strategies, though legal, undermined the competitive fabric of the telecom sector. 

Existing legal provisions under the Competition Act were insufficient to scrutinize Jio’s market strategies at the time of its entry. The legal thresholds required to attract scrutiny under such cases demand that the company should have held a position of dominance for its conduct to be considered as abusive. Moreover, the Telecom Regulatory Authority of India (TRAI) also refrained from intervening here by treating the aggressiveness as promotional and permissible for a new entrant. It overlooked the backing it had from the beginning and how Jio could potentially destroy the benefit of having a wide range of network providers as a customer because no one could compete with the prices that it provided. It entered the market and aggressively expand the customer base by lowering prices without being labelled predatory under the existing legal framework. 

An Approximate Functional Dominance Test 

The changing contemporary market demands a new test to determine “dominance”. Increasing use of algorithms, data, platform dependencies and market behaviour has rendered primordial notions of market share and control over resources anachronistic. What the market needs is a functional approach, questioning the company’s influence and its ability to shape market narratives rather than how big it is or what share of the market it holds. This can be done by adopting a flexible four-prong test to determine the “dominant” position of a company. Firstly, we should look at its market behaviour and if it had altered pricing and other relevant patterns in a short span of time (a high threshold). If a company is fulfilling this condition, then a failure to act early could let a firm distort the market before it formally becomes dominant, making post-facto regulation ineffective. Ex-ante rules are meant to let regulators act early and before market distortions set in. The Digital Competition Bill had proposed such a framework in India. However, with its withdrawal, the system fell back on an ex-post approach, where action comes only after dominance is proven, often when the harm is already done. This again raised the question of whether waiting for establishing “dominance” might be too late in such a framework. Secondly, a leverage gained by using advanced AI and algorithms can be bad for competition. If a firm is able to use cutting-edge technology, it cannot be easily challenged by smaller or traditional players. This can easily lead to soft exclusion of competitors and data-driven price discrimination on multiple products. Thirdly, if a company is able to operate at a loss, not because of market conditions but that of a solid backing of its parent venture, then it automatically puts its competitors on an edge. Such strong financially backed companies can easily outlast losses than its rivals. Fourthly, if a company is regularly able to cut costs, reduce prices and profits margins, abandon customs and rules of the market, it shall be considered as dominant regardless of its size. If a company is able to do such things regularly, it gives fewer choices to consumers and eventually leads to imposition of higher prices once the competition weakens. 

Application of the Test 

Although the test is flexible and better suited to today’s markets, its real challenge lies in whether it can be seen as a practical and acceptable alternative to the existing method used by authorities to identify “dominance”. The viability of the test can thus be tested if we apply it on certain fast-growing companies in the Indian market and in this section, we will try to offer recommendations that would allow the test to function within current legal framework. One of such recommendations is making S. 4 of the Competition Act more flexible and adopting an evidence-led approach to detect dominance.  

Consider the case of Blinkit which offered an example of how quick-commerce platforms are reshaping the market. Their focus on speed and accessibility has drawn consumers away from traditional e-commerce players, prompting larger firms to adjust their delivery models to remain competitive.. The deep pockets of its parent venture, Eternal Limited, helped Blinkit bear initial financial losses of providing super-fast delivery, run deep discounts for extended periods and change market trends, even defeating traditional giants. 

For this test to be implemented effectively, the CCI could consider issuing self-governing guidelines. This can include a clear note on how non-traditional factors such as algorithmic control, data usage, and financial backing should be considered while assessing dominance. Building institutional capacity is also important. A dedicated unit within the CCI to track and understand tech-driven businesses can help address cases that don’t fit within conventional standards. Regulators should also consider that even with a smaller market share, the speed at which a company expands can reflect real market influence. This should be assessed on a case-by-case basis, keeping in mind the pace and complexity of modern markets. 

Conclusion 

The idea of “dominance” must evolve to reflect present-day market realities. Today, market power is shaped as much by data, speed, and algorithmic tools as by traditional indicators like size or market share. Continuing to rely only on older legal benchmarks risks leaving modern forms of influence unchecked. This shift does not require rewriting the law, but rather a more adaptive and grounded interpretation of it. The functional test proposed in this paper offers a practical path forward, one that reflects how firms actually operate in today’s economy. With soft guidance, sector-specific clarity, and a dedicated effort to understand tech-driven practices, the CCI can bring this approach into effect without disrupting the stability of existing law. In doing so, competition law can remain both relevant and fair, supporting innovation, while ensuring that growing forms of market power remain transparent and accountable.