On Tuesday, the Supreme Court strongly criticized the "heavy-handed enforcement" of antitrust laws, warning that overly strict regulatory measures could jeopardize India’s ambition to become a global hub for manufacturing and technology.
The case stems from a 2010 complaint by Kapoor Glass accusing Schott India of abusing its market dominance through exclusionary discounts, discriminatory practices, tying sales, and refusal to supply. The Competition Commission of India (CCI), based on the Director General’s report, found Schott India guilty under clauses (a) to (e) of Section 4(2) of the Competition Act and imposed a penalty of ₹5.66 crore. However, in 2014, the Competition Appellate Tribunal (COMPAT) overturned the decision, citing procedural lapses and lack of evidence of competitive harm. Both CCI and Kapoor Glass subsequently appealed to the Supreme Court.
The Bench of Justice Vikram Nath and Justice Prasanna B Varale observed, “In today’s global economic climate, prudence is vital. As the United States and Europe retreat behind their newly-minted trade walls of protectionist policies to shield their homegrown markets, India’s bid to emerge as a global centre for manufacturing, life-sciences and technology will succeed only if regulation rewards scale and intervenes solely when genuine competitive harm is shown. Heavy-handed enforcement, divorced from market effects, would discourage the long-term capital and expertise the economy urgently needs. An effects based standard is therefore not a mere procedural nicety. It is both a constitutional bulwark against arbitrary restraint of lawful enterprise and a strategic necessity if India is to capture the opportunities that more protectionist economies are in danger of forsaking.”
The Supreme Court dismissed the appeals and upheld the findings of the COMPAT. The Court emphasized that dominance in itself is not unlawful, and only conduct that causes an appreciable adverse effect on competition (AAEC) can be considered an abuse under Section 4 of the Competition Act. It reiterated, "Section 4 of the Act does not per se prohibit dominance; it prohibits the abuse of dominance."
“Competition law is not designed to humble the successful or to clip the wings of enterprises that have, through industry and innovation, secured a commanding share of the market. The true purpose of antitrust laws is to preserve the process of competition, i.e., to ensure that rivals may challenge the incumbent on the merits, that consumers enjoy the fruits of efficiency, and that technological progress is not stifled by artificial barriers. If mere size or success were treated as an offence, and every dominant firm exposed to sanction without tangible proof of competitive harm, the law would defeat itself: it would freeze capital formation, penalise productivity, and ultimately impoverish the very public it is meant to protect.”, the Court added.
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