India: Determination Of Relevant Market – ‘Easier Said Than Done’

Last Updated: 26 February 2014
Article by Smeeksha Bhola

Most Read Contributor in India, September 2016

With progress comes new set of challenges; same is true in context of the challenges faced by Indian Competition watchdog. With the enactment of the Competition Act 2002 ('the Act') our competition regulator Competition Commission of India ('CCI') was entrusted with the task of assuring that the Indian market operate in a competitive environment.

Under all circumstances, the CCI is obligated to curtail any abuse of dominance by a market player. For this the CCI relies on the investigation conducted by the Director General (DG), who determines whether the market player is abusing its dominant position or not and thereafter the CCI pronounces its order. Such order passed by CCI is premised on the said scrutiny of each factor mentioned in Article 19(4) of the Act.

The above said procedure sounds like a cakewalk but it can be aptly remarked as 'it is easier said than done'. In the matter titled as "Belaire Owner's Association vs. DLF Limited and Ors."1 , CCI pronounced its order which created ripples in the Competition jurisprudence; as the said order being a fore-runner in the infant Indian competition jurisprudence, was perceived to settle the dust surrounding the concept "relevant market". But soon the notion seemed to whittle down with more such orders being pronounced by our own CCI. It can be rightly asserted that the concept 'Relevant market' is an indelible ingredient in determining the abuse of dominant position by a market player and thus every time CCI pronounces its order, it needs to interpret the concept 'relevant market'.


Relevant market has been defined in different statutes all over the world like the Act, UK laws, European laws and anti trust laws of US; however it is neither possible nor justifiable to limit the scope of 'relevant market' to few theoretical definitions. Even the adjudicating forums find it difficult to restrict the ambit of the said concept and each dispute results in a new and unique interpretation. So the whole scrutiny boils down to determination as to what is the relevant market in a particular set of facts. Only then the remaining issues can be settled.

Definition of the relevant market as enshrined in Section 2(r) of the Act cannot be exhaustive as the term owes its origin to the concept of Economics and thus is bound to be dynamic depending on the unique set of facts for each case. Section 2(r) of Competition Act 2002 reads as:

"relevant market" means the market which may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets;

It is manifest from the above definition that the task of determining the "relevant market" is left with the Commission and the terms like 'relevant product market' and the 'relevant geographic market' involves understanding of the legal concepts, concepts of Economics and also involves analysis of volumes of data/statistics before arriving unto a conclusion.

Relevant market in common parlance refers to the market where competition takes place. A relevant market can further be divided into 'relevant product market' and 'relevant geographic market'.

To put in simple words, a relevant product market basically refers to two kinds of substitutability of the product/service – one is the 'demand side substitution' which stipulates a situation where the market player is not benefited by a slight increase in price because the consumer has the option of substituting the use of such product/service and the second is the 'supply side substitution' when other market players increase supply of such product/service canceling the effect of any increase in price.

Section 2(t) of the Competition Act 2002 defines the 'relevant product market' as follows:

"relevant product market" means a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use;

Relevant Geographic market being the other facet of relevant market basically involves two elements viz. homogenous condition of competition and distinct condition of competition. Section 2(s) of the Competition Act 2002 defines the relevant geographic market as:

"relevant geographic market" means a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas".


Are the above definitions as enshrined under our Competition Act different from the definitions adopted globally? In fact, the said definitions have been directly imported from the definition as provided in the EC Treaty. Competition Law in European Commission is ruled by the provisions of EC treaty, Article 81 and Article 82 being the two relevant articles. Article 82 is of utmost relevance being closely affiliated to the term relevant market. In Europe, there are basically two sources for relevant market; one is the 1997 Commission notice on market definition and other is the ratio decidendi derived from different case laws. In Europe, jurists place huge reliance on the data for evidentiary value and thus the authenticity of such data are a vital determinant for deciding the relevant market suited to each and every case. Despite a notice and lots of precedents; paradox and conflicting judgments are a common phenomenon in the competition jurisprudence of Europe. A final and settled set of rules for determining the issue of relevant market is still a distant dream.

Section 2 of The Sherman Anti Trust Act of United States (US) states as under:

"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony..."

Therefore the requirements of above section can be summarized as follows2:

(1) the possession of monopoly power in the relevant market and

(2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.

It can be observed from the said section of Anti- trust Act that in evaluating an offence under this section, the first issue that needs to be zeroed in is the determination of the relevant market. Only after such determination, the adjudicating authority can successfully carry any further investigation related to alleged abuse of dominant position by a market player.


It is easy to present the definition of a concept as aggregation of few words but it is equally difficult to interpret such words in different set of facts and circumstances. Every now and then, our CCI finds itself in the same paradox. In the famous Belaire case DG concluded that since the cost of each flat was above 1.5 Crore the relevant market was the 'high- end residential market' in Gurgaon. It further argued 'a customer wanting a flat in Gurgaon would not look at Noida or another city; and that a small change in price – say 5 % - will not make buyers in Belaire shift to lower priced flats under development in Gurgaon. This way both the relevant geographic market and relevant product market seemed to be determined successfully.

But very soon the CCI found itself in an imbroglio when innumerable cases against builders were filed involving the determination of the relevant market to reach unto a conclusion. Very sadly, the regulator while dismissing such complaints seemed perplexed as is evident from the different benchmarks and yardsticks adopted. In the case of Emaar MGF, even though the flats were priced at over Rs. 2 Crore the relevant market was ascertained to be the 'residential accomodation' in Gurgaon. In its very own order, the CCI remarked 'Since the apartments in the case comes to about Rs. 95 lakh.... the relevant market will be high-end residential apartments'.

Such interpretation of 'Relevant Market' in these two cases led to utter confusion giving rise to a moot question; if price of apartments is taken into consideration in determining the 'Relevant market', then how can CCI in one case determine relevant market to be 'residential accommodation, for flats priced over 2 crores' while in other case relevant market was determined to be 'High end residential apartments for flats priced around 95 lakhs'?

Further in the case of another Unitech project, Unitech Habitat in Greater Noida, the relevant market was determined to be the residential units on sale in Noida, greater Noida and the area around the Noida Expressway. In this case, the flats were priced at about Rs. 50 lakh and thus this may be the reason why CCI did not feel the need of adding any prefix like high end or low end to the definition of relevant market.

These are the few perplexities that CCI had faced in last few months as it suffers badly from the absence of scientific economic analysis. As such, it had to rely heavily on scanty information available in the public domain thus leading to such contradictions.


From the above detailed discussion highlighting the different definitions of the concept 'relevant market' which are more or less similar in its ambit all round the globe and from the recent paradox that has caught unawares our adjudicating authority, it is now evident that determination of 'relevant market' is the subject matter which needs to be determined first to decide the issue of abuse of dominance. Despite having various case laws along with statutes at discretion, determination of 'relevant market' had been a nightmare for the adjudicating authorities of almost the whole world as it involves the complexities of both Economics and Law. Even country like US with its archaic Anti-trust laws had not been able to settle down the issue and give finality to the complexities involved in determination of relevant market.


It cannot be disputed that competition jurisprudence of our country is in its infancy. It is also a well settled fact that determination of relevant market is dependant upon set of data/statistics. CCI being the watchdog had been entrusted with this job which in no way can be said to be an easy task. Law being dynamic is bound to witness contradictions. But, instead of being complacent and criticizing CCI every now and then, better way needs to be chalked out.

Determining more than one relevant market for each case and then examining dominance in each relevant market may be given a try. The most vital factor in such determination is the data relied and thus, the data collection and analysis needs a prime consideration by all involved in this process. It must be appreciated that the concept of relevant market is a cornerstone of the competition law and thus must not be misinterpreted to have a restricted reach only to the infrastructure sector. Some or the other day its tentacles will certainly take even other sectors in its grip. It invites the sector representatives and experts to do more research and try to come out with more concrete documents related to the said purpose. Even though it will not be binding, it will certainly have some persuasive value. Last but not the least, competition advocacy initiatives must lead all the relevant measures.


1. 2011CompLR239(CCI)

2. Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306-07 (3d Cir. 2007).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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