ARGUMENTS ADVANCED

I. WHETHER DSM IS ABUSING THEIR DOMINANT POSITION?

1. It is humbly submitted before this Hon’ble Court that the Respondent that is Dontell,
Sutch, and Mearas (hereinafter referred to as DSM) are companies that are in a
Dominant Position as defined under Section 4, Explanation (a) of the Competition
Act, 2002, due to DSM controlling (together) 41 percent of the total market share of
Gondolin1.

2. It is also submitted before this Hon’ble Court that since the Competition Commission
of Gondolin was not informed of the merger of the DSM into a Single Economic
Entity within 30 days of its purported amalgamation as under Section 6, subsection 2,
DSM cannot be considered a single economic entity and thus happens to be a
combination of three companies abusing the dominant position that they have come to
assume as a result of said combination.

3. It is submitted that although the Respondent contends that since Mr. Mambaniwalla
is the majority shareholder2 in all three companies and that by the virtue of this fact
DSM is a single economic entity thus not liable under Section 3 and 4 of the
Competition Act 2002, it is submitted to this Hon’ble Court that it was recognized by
the Competition Commission in their order in the case of Fx. Enterprise Solutions
India Pvt. Ltd and Hyundai Motors India Ltd.3 on page number 24 paragraph 66
that:-

“....noted that such multi-brand dealerships are in the name of separate companies
and in other premises, and the staff and the management of these are different, even
though the shareholders and directors are common in such cases. The DG has
therefore, held that though two dealerships have common shareholders and
directors, they are not a single economic entity.”

Thus it is submitted that the DSM are liable under section 3 of the Act.

1
Annexure 1
2
Page no. 3, Paragraph 1, Factsheet
3
Case No. 36 of 2014
 4. It is most submitted that the s.4 of the Competition Act 4 deals with “abuse of
dominant position” and the s.4 (1) of the said act says that:-
No enterprise or group shall abuse its dominant position.

5. It is humbly further submitted that the DSM have tried to stifle the competition by
directly or indirectly determining the sales price5. This implies that they have tried to
restrain the competition in the market which is in direct contravention of s.4 (2) (b) of
the act according to which:-
“There shall be an abuse of dominant position if an enterprise or a group of enterprise
limits or restricts—
(i) production of goods or provision of services or market

6. It is humbly submitted that the experience of Mr. Alfred Jingle, owner of the
company Raven Co. wherein despite him trying to enter the market the other
companies would reduce their prices in concert6 is indicative of the fact that DSM has
been trying to restrict the entry of other companies from the telecommunications
industry. This is in contravention of Section 4 (2) (c)7, which states that:-
There shall be an abuse of dominant position 4 [under sub-section (1), if an enterprise
or a group].—

“(c) indulges in practice of practices resulting in the denial of market practices”

(a) directly or indirectly, imposes unfair or discriminatory—

(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price) of goods or service.

7. It is submitted that DSM being in a dominant position are able to control the market
by regulation of prices. This has been adjudged by this Hon’ble court as having an
adverse effect on the economy of the country and ultimately the political democracy

4
Competition Act, 2002
5
Para 6 page 2 of factsheet
6
Para 3 page 1 of factsheet
7
Competition Act, 2002
 and social values in the case of Union of India and others v. Hindustan
Development Corpn. and others8 where it was observed that:-

“There are different manifestations of economic power in different fields of economic

activity. One such manifestation is the achievement by one or more units in an
industry of such a dominant position that they are able to control the market by
regulating prices or output or eliminating competition. Another is the adoption by
some producers and distributors, even though they do not enjoy such a dominant
position of practices which restrain competition and thereby deprive the community
of the beneficent effects of the rivalry between producers and producers, and
distributors and distributors to give the best service. It is needless to say that such
practices must inevitably impede the best utilisation of the nation's means of

production. Economic power may also manifest itself in obtaining control of large
areas of economic activity, by a few industrialists by diverse means. Apart from
affecting the economy of the country, this often results in the creation of industrial
empires, tending to cast their shadows over political democracy and social values.”

8. It is submitted that the access to some of the websites was given without any cost by
DSM to its customers.9This gives rise to predatory pricing which is defined in the
Competition Act as follows:

“ “predatory price” means the sale of goods or provision of services, at a price

which is below the cost, as may be determined by regulations, of production of the
goods or provision of services, with a view to reduce competition or eliminate the
competitors”.

s.4 (2) There shall be an abuse of dominant position [under sub-section (1), if an
enterprise or a group].—-

9. It is submitted that the agreement with Ignorkut to provide free and quick access to a
few selected websites10 is discriminatory in nature and hence it violates s.4 (2) (a) of

8
1993 SCR (3) 128
9
Para 1 page 4 of factsheet
 the act which holds such discriminatory conditions in services as abuse of dominant
position.

10. It is submitted that s.2(c) of the Competition Act says that :-

“cartel” includes an association of producers, sellers, distributors, traders or service

providers who, by agreement amongst themselves, limit, control or attempt to control
the production, distribution, sale or price of, or, trade in goods or provision of
services.

It can be said that DSM constitute a cartel and by using its dominant position to
violate the principles of net neutrality they are trying to control the market.
It is worth mentioning that the s.3(3) of the act says that:-
Any agreement entered into between enterprises or associations of enterprises or ... or
association of persons, including cartels, engaged in identical or similar trade of
goods or provision of services, which—
(b) limits or controls production, supply, markets, technical development, investment
or provision of services
... shall be presumed to have an appreciable adverse effect on competition

11. It is humbly submitted that when the private bodies (here DSM) while being in a
dominant position in the market shall be governed by the standards of the public law.
This was observed in the case of Binny Ltd. and Anr. v. V. Sadasivan and Ors.11
where the apex court quoted that:-

"7. In de Smith, Woolf and Jowell's Judicial Review of Administrative Action, 5th
Edn., it is noticed that not all the activities of the private bodies are subject to private
law, e.g., the activities by private bodies may be governed by the standards of public
(law) when its decisions are subject to duties conferred by statute or when by virtue of
the function it is performing or possible its dominant position in the market, it is
under an implied duty to act in the public interest...”

10
Para 1 page 4 of factsheet
11
(2005) 6 SCC 657
 12. It is submitted now that it is established that in the present case where DSM are
having dominant position in the market hence they may be governed by the standards
of the public law, it is worth referring to the constitutional law which in itself is a
public law.
The counsel submits that the dominant position has been abused by not providing for
an intelligible differentia and reasonable nexus while discriminating between the
websites by providing access to some of the websites without any cost and at a faster
speed and devoiding others of the same. Hence there is a violation of Article 14 of the
constitution.
While interpreting article 14, Justice S.K. Das, of the Supreme Court has held in The
State of West Bengal v. Anwar Ali Sarkar that:-

“In order to pass the test, two conditions must be fulfilled, namely, that the
classification must be founded on an intelligible differentia which distinguishes those
that are grouped together from others and that that differentia must have a rational
relation to the object sought to be achieved by the Act.”

13. It is submitted that in the case of Digicel (St. Lucia) Limited and Ors. v. Cable
& Wireless Plc and Ors.12, the Fair Competition Act, 2002 was cited according
to which discriminatory and predatory pricing both are constituents of abuse of
dominant position. The relevant part of the judgement is as follows:-

“Abuse of dominant position.

16.... (3) An enterprise abuses a dominant position if it impedes the maintenance or
development of effective competition in a market and in particular, but without
prejudice to the generality of the foregoing,if it
...(d) directly or indirectly imposes unfair purchase or selling prices that are
excessive, unreasonable, discriminatory or predatory...”

14. It is humbly submitted that in the case of Garden Cottage Foods Ltd. v. Milk
Marketing Board13, the Article 86 of the EEC Treaty was taken into account which

12
[2010] EWHC 888
13
[1984] 1 AC 130
 again prohibits discrimination and says that it places other parties at a competitive
disadvantage. It was observed that :-

"Any abuse by one or more undertakings of a dominant position within the common
market or in a substantial part of it shall be prohibited as incompatible with the
common market in so far as it may affect trade between Member States. Such abuse
may, in particular, consist in:
... (c) applying dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage...”

It is worth mentioning that in the case of Jai Balaji Industries Ltd. and Anr. and
Ajay Kumar Tantia vs. The Union of India (UOI) and Ors.14 it was observed that:-
“Article 86 of the EEC is almost parimateria to the Section 4 of the Competition Act.”

14
(2011)3GLR43