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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Corporate and Economic Laws

Case: Orion Steels Ltd, a company with a Rs 500 crore turnover, also has a related Competition Commission inquiry. Orion holds a 70% market share in specialised alloy rods and charges lower prices only to buyers who agree not to purchase from rival makers. Dealer Mehta complains. Under the Competition Act, 2002, which best characterises Orion's conduct?

Orion's conduct can amount to abuse of a dominant position. Dominance is not itself prohibited, but giving lower prices only to buyers who avoid rivals is an exclusionary practice. The Commission must first define the relevant market and establish dominance. No agreement among competitors exists, so it is not a cartel.

  1. ANot an offence as having a dominant position is itself prohibited and fined without examining conduct
  2. BA prohibited cartel because it involves price fixing among competitors
  3. CA permitted vertical agreement as dealers consent to it
  4. DPossible abuse of dominant position, as conditioning supply on exclusivity can be an unfair or exclusionary practice, once dominance in the relevant market is establishedCorrect

Explanation

Dominance itself is not prohibited; abuse of it is. Making buyers agree not to deal with rivals is an exclusionary practice that the Commission may treat as abuse, after defining the relevant market and finding dominance. It is not a cartel, since no agreement among competitors is described, and dealer consent does not legitimise abuse.

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