In business, competition is never as healthy as total domination. It brings out the best in the products but worst in the competitors, to maintaining the balance is crucial for an equitable economic environment. Competition refers to a situation in a marketplace in which entities or sellers independently strive for the patronage of buyers in order to achieve their respective business objectives. We have been talking for ages about what is competition but never emphasized what is not competition in a marketplace. We have seen the dynamics of competition and economy how the competition plays a catalytic role in unlocking the potential of any economy.

With growing complexities of industrial structure and the greed for scaling heights for achieving maximum share in the market is inducing malpractices such as abuse of dominant position, bid rigging, unfair trade practices, and formation of cartels.

Abuse of dominance

The position of strength and power enjoyed by an organization in the market independently without competitive forces opposing, it basically exploits the consumers imposing them with imposing conditions in purchase or sale of goods/services, predatory pricing, limiting production or technical development, and creating barriers to entry.
Example – Predatory pricing is where the cost of goods/services is kept below the actual cost just to eliminate the competitors.
Telecom industry – Reliance Jio vs Bharti Airtel vs Vodafone Idea

Bid rigging and cartel

            Bidding as a practice is to secure goods/services on the most favorable prices and conditions to manipulate the market resulting in an anti-competitive bid called corruption in auctions. When competitors agree in advance as to who will bid for the contract more specifically to predetermine the winning bidder, agreements not to bid against each other and agreements to squeeze out outside bidders. It is a form of fraud and eventually harms the economy and public in long run. Mostly occurs in tenders or government tenders for the supply of tools or food rations etc
Example – Use of multiple directorships in companies to submit the bids for the same products resulting in cover bidding.

Cartel
Business cartels occur when competitors get together and agree not to compete against each other by fixing prices, dividing and sharing the market controlling the production and distribution of goods and services. The nature of a cartel is to raise prices above competitive levels resulting in harming the ultimate consumer as he is left with no choice.
Example – Cement industry.

Conclusion

Competition should not always be coupled with the rivalry between market players to attract customers rather adopt fair means to combat competition for better outcomes in the market.   
The pessimistic approach towards competition needs to be altered but that does not mean it shouldn’t have strict norms and regulations governing. It should not create division & animosity in the society rather should thrive for balance on economic grounds.

                                     

BY

KASTURI MORE

LLB 1st Year

YASHWANTRAO CHAVAN LAW COLLEGE, PUNE