Introduction
Oligopolistic markets — where a small number of large firms account for most of the market’s supply — are ubiquitous in India’s economy: aviation, telecom, cement, steel, petroleum refining, banking. These markets share a structural characteristic: each firm’s optimal strategy depends on the anticipated responses of its few competitors, creating strategic interdependence that can produce competitive outcomes significantly worse than in more fragmented markets, even without any explicit agreement to coordinate. When a market functions as if coordination has occurred — with prices significantly above competitive levels, margins consistently high, and competitive rivalry effectively suppressed — but no explicit agreement can be demonstrated, competition law faces a fundamental challenge.
The doctrine of “collective dominance” addresses this challenge: it recognises that a group of firms can collectively hold a dominant position in a market, enabling the competitive harm associated with dominance to be addressed through abuse of dominance law even where no single firm individually satisfies the dominance threshold. Indian competition law, in its current form, does not recognise collective dominance. The Competition Act 2002 defines “dominant position” in terms of a single enterprise’s market position, and the CCI has not yet adopted a collective dominance theory in its decisional practice. Whether India’s competition framework should move toward collective dominance, and what the analytical and institutional challenges of doing so would be, is the central question this article explores.
Legal Framework
Section 4(1) of the Competition Act 2002 prohibits the “abuse of dominant position” by an “enterprise” — defined in Section 2(h) as including a person or a department of the Government engaged in specified activities. The definition of “dominant position” in Section 4(2) Explanation refers to “a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to… operate independently of competitive forces prevailing in the relevant market, or affect its competitors or consumers or the relevant market in its favour.”
The singular language — “enterprise,” “a position of strength” — reflects a legislative choice to frame dominance as a characteristic of individual firms. An alternative legislative formulation — “enterprises, jointly or severally” — would be necessary to enable a collective dominance theory under the existing statute, absent a creative interpretation of the singular language that stretches it to encompass groups of firms.
Section 3(3) of the Act addresses coordinated conduct through the anti-competitive agreements framework, applying to horizontal coordination between competitors. This provision could, in principle, be used to address collective oligopolistic conduct — but it requires proof of an “agreement” (broadly defined to include “action in concert”), which creates the same evidential challenge that motivates the collective dominance doctrine in the first place.
Judicial and Regulatory Context
The CCI has addressed oligopolistic markets primarily through Section 3(3) enforcement — the cement cartel decisions, the airline fuel surcharge coordination cases — where circumstantial evidence of coordination was sufficient to establish “action in concert.” These cases have not involved an explicit collective dominance theory.
The Supreme Court of India has not addressed collective dominance. The NCLAT has not adopted the doctrine, and there is no Indian precedent that applies collective dominance analysis in the European sense.
Contemporary Issues and Analysis
The analytical basis for collective dominance rests on the economic theory of tacit collusion in oligopolies. Where an oligopoly is sufficiently concentrated, and where the structural conditions for coordination are favourable — market transparency, symmetry among firms, high barriers to entry, frequency of interaction — the oligopolists may achieve a coordination equilibrium without explicit communication. Each firm, anticipating its rivals’ responses, sets its prices at coordinated levels not by agreeing but by independently calculating that coordination is the profit-maximising strategy given the anticipated responses. The result is coordinated effects — market prices above competitive levels — without any agreement in the legal sense.
The structural analysis for collective dominance requires assessment of three conditions, derived from the EU Court of Justice’s seminal judgment in Airtours v. Commission (2002): the ability to monitor one another’s conduct, the credibility of a deterrence mechanism against deviation, and the foreclosure of competitive response from outside the oligopoly. These conditions are not legal tests in the ordinary sense but economic assessments of market structure that require sophisticated economic analysis.
India’s telecom market after the consolidation that followed Jio’s entry presents a potential case study. The three-player market that emerged after the consolidation — Jio, Airtel, and Vi — exhibits features potentially consistent with coordinated effects analysis: transparent pricing through publicly advertised tariffs, high market concentration, regular tariff revisions that occur in close proximity across the three players, and significant barriers to entry given spectrum costs and network infrastructure requirements. Whether this market exhibits genuine collective dominance or merely rational parallel pricing in a transparent market is an empirical question that has not been formally examined.
Comparative and International Perspective
EU competition law explicitly recognises collective dominance. Article 102 TFEU prohibits “abuse by one or more undertakings of a dominant position” — the “one or more” formulation explicitly encompasses collective dominance. The Court of Justice in the Compagnie Maritime Belge case (2000) confirmed that Article 102 applies to collective dominance, and EU merger control applies a collective dominance test to assess whether mergers create or strengthen a collective dominant position.
The UK Competition and Markets Authority applies collective dominance analysis in market investigations under the Enterprise Act 2002 — its market investigation into retail banking concluded that the retail banking market was characterised by an “adverse effect on competition” partly based on coordinated effects analysis.
Australia’s competition law, by contrast, does not have a collective dominance provision but has debated its introduction in the context of the digital markets review, with proposals to adopt a formulation closer to the EU approach.
Practical and Policy Implications
The absence of a collective dominance doctrine leaves a significant enforcement gap in Indian competition law. In concentrated markets where coordinated effects occur without explicit agreement, the CCI’s options are limited to: (a) seeking to establish an “agreement” under Section 3, which requires proof of coordination mechanisms; (b) seeking merger control remedies prospectively where a proposed merger would create a concentrated oligopoly; or (c) recommending market investigations to Parliament. None of these is a direct substitute for collective dominance enforcement.
For businesses in oligopolistic markets, the absence of collective dominance exposure under Indian law creates a comparative compliance advantage relative to EU-facing businesses, though this advantage may narrow if Indian law evolves toward the EU model.
Suggestions and Reforms
The Competition Act should be amended to include a collective dominance provision, adapting the EU formulation to Indian conditions. The definition of “dominant position” should be modified to include “a position of strength, enjoyed by two or more enterprises jointly, in the relevant market in India,” with the criteria for collective dominance assessment specified in the implementing guidelines.
The CCI should develop economic guidelines on coordinated effects analysis, specifying the market structure conditions relevant to a collective dominance assessment and the evidentiary standard for establishing collective dominance. This would provide transparency for businesses and consistency in enforcement decisions.
Conclusion
Collective dominance is a doctrine whose absence from Indian competition law reflects the legislative choice of 2002 rather than a considered judgment that coordinated oligopolistic effects are not a competition problem worth addressing. The sectors of the Indian economy where oligopolistic coordination is most plausible — telecom, aviation, banking, cement — are among the most economically significant for consumers and business users. A competition law framework that cannot directly address coordinated market effects by a small number of dominant firms has a significant structural gap, and the persistence of that gap deserves more policy attention than it has received. The time for a collective dominance provision in India’s Competition Act is overdue.
