The Competition Commission of India (CCI) is certainly trying to live up to its new status of the premier competition law watchdog in the country, if recent events are to be taken as an evidence of its proactive stance. Recently, it has launched a full-fledged inquiry against Saint-Gobain, the renowned French glass manufacturing company. This had started after a preliminary review, according to the CCI, has revealed that the Indian unit of the company, Saint Gobain Glass India Limited (SGGIL) has engaged in the practice of limit pricing with the motive of rendering entry into the float glass sector unprofitable and not financially viable for other players in the market.
For the uninitiated, limit pricing is a strategy that a monopolist can adopt to discourage entry of new players in the market. Usually, limit price is a price lower than the average cost of production or otherwise, just low enough for a new player not to make any profit that can encourage him to enter the market to compete with the monopolist. Obviously, the monopolist can, using his already strong foundation or considerable resources in the market, maintain this price position longer than a small-scale new player can. A classic example of abuse of dominant position, limit pricing is prohibited under the competition laws of many countries, including the Indian Competition Act, 2002.
SGGIL, however, has denied all such allegation and are steadfastly representing that under no circumstances can any evidence of abuse of dominance be found against them.
[This post has been authored by Shouvik Kr. Guha, Research Associate, The W.B. National University of Juridical Sciences, Kolkata]
[This post has been authored by Shouvik Kr. Guha, Research Associate, The W.B. National University of Juridical Sciences, Kolkata]
