The relationship between intellectual property (IP) laws and competition laws has proven to be the subject of debate and study for a long time. While intellectual property laws grant owners exclusive rights, competition laws aim to ensure free markets and prevent anti-competitive behavior. As a result, it appears that the goals of these two legal frameworks are at odds. Section 3 of the Competition Act gives certain exemptions for intellectual property rights, but Section 4 is hesitant on the question of dominant position abuse.
Section 3 of the Competition Act prohibits entering into anti-competitive agreements and states that any such agreement shall be void. However, Section 3(5)(i) exempts intellectual property (IP) laws from it, which states that using IP rights granted under certain laws is exempted from Section 3 if considered reasonable and necessary for IP protection. [SB1] [SJ2] However, this exemption is not absolute and is subject to specific criteria and limitations. Importantly, this exception only applies to anti-competitive agreements under Section 3 and does not apply to abuse of dominant position requirements under Section 4. Despite the Competition Law Review Committee’s (CLRC) advice in 2019 for including an IP exception in Section 4, the Competition Amendment Act of 2023 has failed to do so.
Section 4 of the Competition Act defines a dominant position as a strong position in the specific sector of the market, held by a company, which enables it to: (a) operate independently of competitive forces prevailing in the market; and (b) affect its competitors or consumers or the relevant market in its favour. This position, as enumerated above, allows the corporation to operate with limited competition and to exert influence over competitors, consumers, and the relevant sector of the market. It is critical to understand that simply maintaining a dominant position is not unlawful; however, abusing it is. When deciding whether a corporation has a dominant position, the competition authority looks at the considerations specified in Section 19(4) of the Act. These considerations help determine whether a company has obtained a monopoly or dominance, whether as a result of a statute or otherwise. This forms the point of intersection between Competition law and IP rights. However, it is critical not to assume that intellectual property exclusivity immediately corresponds to market domination or strength. Other market elements and characteristics must be investigated to establish whether intellectual property plays a role in the creation of market power and dominance.
Overall, EU jurisprudence focuses on controlling dominant firms’ behaviour and analyzing product indispensability, whereas Indian jurisprudence takes an effects-based approach.
The provisions in the Competition Amendment Act of 2023 do not include clear tests or standards for examining the impact on competition. However, the NCLAT's interpretation of the Abuse of Dominance clauses has recently changed. The NCLAT ruled in the case of Google LLC v. CCI, issued in April 2023, that an “effect” analysis is essential for showing abuse of dominance under Section 4. The NCLAT's view reflects a progressive approach to examining matters of this sort.
Abuse of a dominating position complicates competition law because acceptable practices may contribute to dominance while also having pro-competitive consequences. In its application of economic approaches, the CCI's decision-making is conflicted. The 2023 ruling of the NCLAT in Google v. CCIis a significant step forward. However, an effects-based standard is required for consistent analysis. The difference in intellectual property protection under the Competition Act is a reason for worry due to the employment of different evaluation standards. It is difficult to provide assurance by amendments in dynamic IP markets. The interpretation of the Supreme Court will determine competition law and abuse of dominant position norms in India.
 Google LLC v. Competition Commission of India, Competition Appeal (Appellate Tribunal) No. 1 of 2023, decided on 29-03-2023.