C&M E-Alert: Supreme Court clarifies that abuse of dominance requires effects analysis

WHAT HAS HAPPENED?

In a landmark ruling in Competition Commission of India v. Schott Glass India Pvt. Ltd,[1] the Supreme Court of India has clarified that a finding of abuse of dominance under competition law cannot be sustained unless the alleged conduct:

• results in actual or likely anticompetitive effects; and

• lacks objective commercial justifications.

  
  

The Supreme Court emphasized that intervention under competition law must be grounded in rigorous fact-finding and economic analysis including assessing impact on equally efficient competitors. Further, the ruling sets a valuable precedent on when volume-based discounts, functional rebates and bespoke deals with some customers are not abusive and may be legitimate commercial strategies. It also recognises that certain restraints which are proportionate and ancillary to the commercial strategy may be permitted.

The Supreme Court also sets out some rules of procedural fairness and standard of proof that would apply to abuse of dominance cases.

The Supreme Court decision recognises that abuse of dominance provisions set down some of the most stringent obligations in a free market economy. If applied without clear evidence of harm, such restrictions risk undermining the very goal of fostering competitive markets. By insisting on effects-based analysis and procedural fairness, the Supreme Court has laid down important safeguards that will help ensure competition law remains a tool for protecting markets, not penalizing success.

KEY TAKEAWAYS

CASE BACKGROUND

Set out below is a background of the key facts and events that culminated in the proceedings before the Supreme Court.

• Schott Glass India Pvt. Ltd. (Schott India), a subsidiary of Schott AG, Germany, produces Neutral Glass Clear (NGC) and Neutral Glass Amber (NGA).

• In 2008, a Schott group company formed a joint venture with Kaisha Manufacturers, creating Schott Kaisha Pvt. Ltd. (Schott Kaisha), India’s largest glass converter (converters transform tubing material into finished products).

• Schott India offered two rebate schemes: (a) volume-based discounts based on aggregated purchases of NGC and NGA; and (b) functional rebates (tied to conditions such as avoiding Chinese tubes and adhering to fair pricing).

• In 2010, Kapoor Glass India Pvt. Ltd. (Kapoor Glass), a converter, alleged that Schott India abused its market dominance through, among other things, rebates and preferential treatment to Schott Kaisha.

The majority decision of the Competition Commission of India (CCI) had upheld the findings of its investigation arm, the Director General (DG),[1] holding that:

• Schott India was dominant in the markets for NGC and NGA in India, due to high market shares, among other factors;

• The combined effect of rebates and preferential treatment to Schott Kaisha foreclosed competition in the market; and

• Aggregation of different tubing products for calculating rebates resulted in illegal tying and bundling.

Geeta Gouri, Member (Economics) of the CCI at the time, dissented finding that: (a) the discounts were commercially justified and non-discriminatory; and (b) no harm to competition or consumers was shown, based on economic parameters (in fact evidence demonstrated absence of harm).

The Competition Appellate Tribunal (COMPAT), the erstwhile appellate body for competition matters, had set aside the CCI decision on appeal,[1] holding among other things that:

• Discounts to Schott Kaisha were justified by its large purchase volumes;

• There was no evidence of tying, exclusionary conduct, or market foreclosure;

• Schott India was not active in the downstream market, so no tying or bundling occurred; and

• CCI relied on unverified statements without allowing cross-examination (requested by Schott), which was a serious procedural lapse.

The COMPAT allowed Schott India’s appeal, concluded that the available evidence did not establish any abuse of dominant position, and set aside the penalty imposed by the CCI. It also imposed costs of INR 100,000 (approx. USD 1200) on Kapoor Glass.

• The CCI filed an appeal before the Supreme Court seeking restoration of its original order and penalty, claiming that the COMPAT had misread evidence.

• Based on the holdings highlighted in the previous section, the Supreme Court upheld the COMPAT’s decision and imposed costs of INR 500,000 (approx. USD 6000) on Kapoor Glass. This is notable, as Indian courts rarely impose costs as a matter of course. The costs imposed underscore the gravity with which it viewed the protracted nature of the proceedings and the unsubstantiated nature of allegations.

CONCLUSION

The Supreme Court’s judgment reflects a measured and forward-looking approach to competition law. By requiring clear evidence of actual harm, the Court reaffirmed that the purpose of competition regulation is to safeguard market dynamics, as opposed to specific market participants. This principled stance fosters business certainty, encourages innovation, and ensures that regulation acts as an enabler rather than a constraint, in India’s rapidly evolving economy.

[1] Competition Commission of India v. Schott Glass India Pvt. Ltd., Civil Appeal No. 5843 of 2014.

[2] Kapoor Glass India Pvt. Ltd. v. Schott Glass India Pvt. Ltd., Case No. 22 of 2010.

[3] Schott Glass India Pvt. Ltd. v. CCI, Appeal No. 91 of 2012.

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