Section 4 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 4 of the Competition Act, 2002 prohibits an enterprise or group from abusing its dominant position. Sub-section (2) lists five kinds of abuse, and the Explanation defines "dominant position", "predatory price" and "group". The 2023 amendment makes one change, to the Explanation under clause (a) of sub-section (2).
As per the consolidated text of the Act published by the Competition Commission of India (amendments shown up to the Finance Act, 2017), read with the Competition (Amendment) Act, 2023 as published in the Gazette of India on 11 April 2023. Holding a dominant position is not itself prohibited; abusing it is. Section 4(2) lists unfair or discriminatory conditions or prices, limiting production or technical development, denial of market access, supplementary obligations with no connection to the contract, and using dominance in one relevant market to enter or protect another. The 2023 Act changes "discriminatory condition or price" to "condition or price" in the Explanation to clause (a). The 2023 change applies from the date notified for that provision; the notification is not in the sources consulted and should be checked.
Section 4(1): the rule
Section 4(1) reads: "No enterprise or group shall abuse its dominant position." The words "or group" were added to this sub-section by the Competition (Amendment) Act, 2007, and the 2023 Act does not touch sub-section (1). The prohibition is aimed at the abuse. It does not prohibit a firm from being large, successful or the only supplier of something, so long as it does not behave in the ways listed.
Section 4(2): when there is an abuse
Section 4(2) says there is an abuse of dominant position under sub-section (1) if an enterprise or a group does any of the following. (The consolidated text prints the opening words with a stray dash after the closing bracket; we have kept the meaning as printed.)
- (a) directly or indirectly imposes unfair or discriminatory (i) condition in purchase or sale of goods or service, or (ii) price in purchase or sale (including predatory price) of goods or service;
- (b) limits or restricts (i) production of goods or provision of services or market therefor, or (ii) technical or scientific development relating to goods or services to the prejudice of consumers;
- (c) indulges in practice or practices resulting in denial of market access in any manner;
- (d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or
- (e) uses its dominant position in one relevant market to enter into, or protect, other relevant market.
Example. Narmada Power Components Ltd is the main supplier of a specialised part to assemblers in a region. It tells buyers that they will get the part only if they also buy an unrelated consumable from it (clause (d)), and it refuses to supply a new entrant that wants to start assembling (clause (c)). Both fit the printed words, if Narmada is dominant in the relevant market. The question of dominance comes first and is analysed through the factors in Section 19(4), explained in our article on the factors for adverse effect, dominance and relevant market.
If you are reviewing supply terms with a large customer base, our legal dispute resolution team can look at whether your market position and terms invite a complaint.
The Explanation to clause (a) and the 2023 change
The Explanation under clause (a) says that the unfair or discriminatory condition or price "shall not include such discriminatory condition or price which may be adopted to meet the competition". The 2023 Act (its Section 5) says: "for the words 'discriminatory condition or price', the words 'condition or price' shall be substituted." The words occur once in that Explanation, so after the amendment it reads: "...shall not include such condition or price which may be adopted to meet the competition".
| Point | Before (consolidated text) | After (2023 Act) |
|---|---|---|
| Exception for meeting competition | "such discriminatory condition or price which may be adopted to meet the competition" | "such condition or price which may be adopted to meet the competition" |
| Clause (a) itself, "unfair or discriminatory" | As printed | Not changed |
| Sub-sections (1) and (2)(b) to (e) | As printed | Not changed |
We read the amendment as removing the word "discriminatory" from the exception only, since the amending clause names no other place. The words "unfair or discriminatory" in clause (a)(i) and (ii) are not mentioned in the 2023 Act and remain.
Explanation (a): dominant position
"Dominant position" means "a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to— (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favour." The words "relevant market" are defined in Section 2; see our article on relevant market, which also sets out the demand-side and supply-side tests added in 2023.
Explanation (b): predatory price
"Predatory price" means "the sale of goods or provision of services, at a. price which is below the cost, as may be determined by regulations, of production of the goods or provision of services, with a view to reduce competition or eliminate the competitors." The consolidated text prints a full stop after the word "a" ("at a. price"); we flag the slip and read it as "at a price". The cost is to be "determined by regulations". No regulations on cost are among the sources we consulted, so we state no cost test.
Explanation (c): group
The consolidated text inserts, by the 2007 amendment, a clause (c): "'group' shall have the same meaning as assigned to it in clause (b) of the Explanation to section 5." That Explanation was itself substituted in 2023, so the meaning of "group" in Section 4 is now the meaning in the substituted clause; see our article on the Explanation to Section 5. The 2023 Act does not change the text of Section 4's clause (c).
How abuse of dominance fits with the rest of the Act
An inquiry into an alleged abuse starts under Section 19 on information or a reference, and the Commission's orders and penalty powers are in Sections 27 and 28; the power to order the division of an enterprise enjoying a dominant position is in Section 28 and is covered in our article on the division of a dominant enterprise. A short introduction to the topic is in the guide on abuse of dominant position under Section 4, and practical habits for a business that holds a strong market position are in our post on competition compliance for businesses.
Need help with a dominance question?
If you supply an important input, run a large platform of customers or are on the receiving end of exclusive or bundled terms, our team can read your arrangements against Section 4. Start with a legal dispute resolution discussion and bring the contracts and the correspondence in question.
Key takeaways
- Section 4 prohibits abuse of a dominant position by an enterprise or a group, not dominance itself.
- Five kinds of abuse are listed in Section 4(2)(a) to (e).
- "Dominant position" is a position of strength in the relevant market, in India.
- The 2023 Act drops the word "discriminatory" from the meet-the-competition exception in the Explanation to clause (a).
- The cost test for predatory price is "as may be determined by regulations", and no such regulation is in the sources consulted.
Read next
- Anti-competitive agreements, cartels and bid rigging
- Factors for adverse effect, dominance and relevant market
- Division of an enterprise enjoying dominant position
- Abuse of dominant position: Section 4 guide
Disclaimer: Based on the consolidated text of the Competition Act, 2002 published by the Competition Commission of India (amendments shown up to the Finance Act, 2017), read with the Competition (Amendment) Act, 2023 as published in the Gazette of India on 11 April 2023, and on the regulations and guidelines of the Commission as notified in 2024, as consulted on 2 October 2026. Commencement notifications, notified thresholds, rules and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.