Monopoly power can harm society by making output lower, Higher prices, and less innovation in a competitive market. The monopoly power requires an important screen for evaluating singlefirm liability. Section 4 of the Indian competitive Act, 2002 regulates the conduct of dominant enterprises. This section prohibits the abuse of dominant position by an enterprise or group. The act regulates the conduct of both private and public sector enterprises and all the departments of the government which encourage non-sovereign functions. The competition commission of India enjoys an exclusive jurisdiction for enforcement of section 4 of the Indian Competitive Act, 2002. Under the act, the commission has wide power of investigations and enforcement. There is no formal policy statement in regard to Section 4 which is made by the commission itself. Through some initiatives, the commission enforces actions that make it clear that the enforcement policy in India’s digital market. The monopolies and Restrictive Trade Practice Act, 1969 was replaced by Competition Act, 2002, and the MPRT Commission was replaced by the Competition Commission in India. The power of the market is with sellers to exercise some control over the price it charges. In the economy, few firms have price takers which face an elastic demand. Market power and monopoly power are related but they are not the same. All the products are different someone another and it also depends on consumer tastes, the reputation of sellers, location of the product, and sellers have some degree of market power.
THE COMPETITION ACT, 2002
The competition Act, 2002 received the approval of the President on January 13, 2003. Few sections of the Competition Act, 2002 come into force from March 31, 2003, but the majority of sections come into force from June 19, 2003. The instruments of the competitive act include Anti-competitive agreements, abuse of dominance, merger or combinations, and competitive Advocacy. The competitive Act enacted The Anti-competitive agreements are divided into two types- Horizontal Agreements which are mentioned under Section 3(3) which talks about the cartel, Bid-rigging, etc. between two or more enterprises operating at the same level of business. Vertical Agreement which is mentioned under Section 3(4) which speaks about exclusive supply/ distribution, tie-in arrangement, and resale price maintenance, refusal to deal, etc.
ABUSE OF DOMINANCE
Abuse of dominance can be defined as the situation where a firm or a group has a dominant role in the market and also have the intention to eliminate a competitor or a competing firm from entering the market. The dominant enterprise can exercise certain practices that section 4 of the Competition Act prohibits. Some Practices are- Imposition of predatory prices, limiting the supply of goods and supplies, use such position to enter into another market. there are a number of factors that help in determining the influence of dominant enterprise of same. Some of those factors are the market share owned, the consumer relying on the enterprise, the size of the enterprise, the importance of the competitors, etc. Section 4(2) of The Competition Act, 2002 specifies practices which are used by dominant enterprises or groups of enterprises are abuse are- - Imposing unfair conditions in purchase or sale of goods or service directly or indirectly. - Imposing unfair prices in purchasing or sale of goods. - Limiting or restricting the production of goods according to service or market. - Denying market access. - Using the position which is relevant in one market to enter into another market. - Restricting technical or scientific development relating to goods and services to prejudice of consumers.
WHY GOVERNMENT REGULATES MONOPOLIES
The government has to regulate monopolies in the market for the following reasons- - Prevent Excess price in Market- The government regulation, monopolies will have to put prices above the competitive equilibrium. The excess price will lead to allocative inefficiency and a decline in consumer welfare. - Quality of Service- it is considered the monopoly in a particular field in the market directly affects the quality of the product or service. Government has to ensure that the firms meet the minimum standards of the service. - Promote competition- In some industries to encourage competition and the government would not have to make regulations. - Natural Monopolies- In some domains of the market because of high economies of scale, the most efficient number of firms is one. The government cannot encourage competition in the first place and it is essential to regulate the firm to prevent the abuse of monopoly power.
The competition Act, 2002 is landmark legislation that does not promote dominance abuse in the market. The law works in promoting competition in the market and helps the firms to distribute profits in sizes that increase business potential in the community. The whole act would definitely enhance the market competition nationally and internationally. The power to monopoly has both greater and more durable power over price than mere market power and serves as an important screen. The court generally has to examine the share of more than 50 percent is maintained in the market share. Indian regulators and law enforcement agencies should find a way to reconcile the main point of conflict in both fields, as intellectual property rights restrict competition, while competition law generates it. Therefore, even if competition law disapproves of the unreasonable exercise of market power or the abuse of a dominant position obtained as a result of intellectual property rights, but the right holder resorts to unreasonable restrictive practices, interested parties could benefit from relief under the competition law.
1. Legal Service India, https://www.legalserviceindia.com/legal/article-1814-competitionlaw-in-india.html
3. CorporateFinanceInstitute,https://corporatefinanceinstitute.com/resources/knowledge/eco nomics/legal-monopoly/
5. JSTOR, https://www.jstor.org/stable/79181