[Opinion] Abuse of Dominant Position & Intellectual Property | Emerging Competition Law Norms in India

Intellectual property laws like the Patents Act confer exclusive rights upon their owners, while the role of competition law is to keep the markets open; this leads to a simplistic presumption that there is an inherent conflict between the objectives of competition law and IP laws. While a specific mention of intellectual property is incorporated in section 3 of the Competition Act dealing with anti-competitive agreements, section 4 related to the abuse of dominant position is silent on this issue.

Section 3(5)(i) of the Competition Act creates a carve out for IP laws and provides a position of deference to those listed IP by providing an exemption from section 3 if the use of IP rights granted under the specified laws is reasonable and necessary to protect the IP. Therefore, this exemption from the operation of section 3 is not a blanket one and comes with riders. This exemption is limited to the anti-competitive agreements falling under Section 3 of the Competition Act and by itself does not apply to abuse of dominant position under Section 4 of the Act. Competition Law Review Committee (CLRC) 2019 proposal to incorporate IP exemption in section 4 has not been realised through Competition Amendment Act, 2023.

Establishing Intellectual Property Induced Dominance

Explanation to section 4 defines the dominant position as the position of strength in a relevant market enjoyed by an enterprise, which enables that enterprise to operate independently of competitive forces prevailing in the relevant market; or affect its competitors or consumers or the relevant market in its favour. It is pertinent to note that only abuse of the dominant position in a relevant market violates the Competition Law and the law does not frown upon enjoying a dominant position. Section 19 (4) of the Competition Act provides a list of factors which the competition authority takes into account while analysing whether an enterprise enjoys a dominant position or not. Although the list is not exhaustive, yet it is broad enough to cover a host of factors. One of the factors listed is the monopoly or dominance gained by virtue of a statute. This factor clearly points towards intellectual property induced dominance. One has to be wary of the fact that mere exclusivity provided by intellectual property should not be seen as a situation of market power or dominance. Various factors and relevant market characteristics need to be delineated and taken into account to ascertain whether IP is one of the factors providing market power leading to dominance.

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