I. Introduction

In May 2025, the Supreme Court (‘SC’) delivered its much-anticipated decision in Competition Commission of India v. Schott Glass India Pvt. Ltd.(‘Schott Glass’). The case dealt with the intersection of loyalty rebates, vertical integration, and the abuse of dominance regime under Section 4 of the Competition Act, 2002(‘the Act’). The Court held that abuse of dominance must be established through an effects-based analysis, signalling a definitive departure from form-based reasoning. This doctrinal shift brings India into closer alignment with global competition law regimes, particularly those in the European Union and the United States. Yet, the Court stopped short of articulating how such effects are to be assessed in practice. The judgment leaves open a central question: Did the SC strike the right balance by merely affirming the need for an effects-based test, while refraining from laying down a method for its application?

In this article, I seek to answer that question through two lenses. On one hand, the lack of methodological guidance risks introducing doctrinal ambiguity and enforcement inconsistency, particularly given the absence of a statutory “appreciable adverse effect on competition” (‘AAEC’) standard in Section 4. On the other hand, judicial restraint may have been prudent at a time when India’s competition effects jurisprudence is still in its early stages.

To this extent, I first examine Section 4's legal framework and interpretive ambiguities. Then, I analyse the ruling in Schott Glass. Finally, I evaluate the judgment's implications, highlighting methodological gaps and highlighting a practical solution for structured enforcement.

II. The Legal and Economic Framework of Section 4

Section 4 of the Act prohibits the abuse of a dominant position by an enterprise or group. Sub-section (1) declares the general prohibition, while sub-section (2) offers an illustrative list of abusive practices, including unfair or discriminatory pricing, limiting production or technical development, denial of market access, tying or bundling, and leveraging dominance across markets. Unlike Section 3, which deals with anti-competitive agreements and explicitly requires a finding of an AAEC, Section 4 does not contain any such textual requirement (see here and here).

This asymmetry between Sections 3 and 4 introduces a fundamental ambiguity in the law. Does Section 4 presume abuse solely from the form of conduct (e.g., discrimination or tying), or must the conduct be shown to have anti-competitive effects? Prior to Schott Glass, the answer remained unsettled. The CCI had at times interpreted Section 4 as permitting form-based findings particularly where pricing practices appeared exclusionary on their face without a rigorous demonstration of harm to competition. This interpretive gap created doctrinal inconsistency and left enterprises uncertain about the threshold for liability.

By contrast, the inclusion of AAEC in Section 3 anchors that provision in a consequences-based standard, compelling an analysis of actual or likely harm to the competitive process. The absence of similar language in Section 4 has given rise to concerns that the provision could be deployed against dominant firms on a presumptive basis, thereby punishing size rather than abuse.

The term “dominant position” is defined in the Explanation to Section 4 as a position of economic strength that enables an enterprise to operate independently of competitive forces or to affect the relevant market in its favour. Notably, dominance itself is not prohibited; only abuse is. Yet, what constitutes abuse and how it must be proven, has been a matter of evolving interpretation.

The CCI, in its earlier jurisprudence (see MCX Stock Exchange v. NSE), tended to treat certain practices such as deep discounting or exclusive dealing as presumptively abusive when engaged in by a dominant firm, often without a clear assessment of their market impact. However, over time, particularly in decisions post-2015 (see Matrimony.com v Google), the Commission has increasingly invoked market structure, foreclosure effects, and consumer harm as factors in its analysis, albeit inconsistently and without a formally adopted standard.

III. The Ruling

The case arose from Kapoor Glass India Pvt. Ltd. complaint against Schott Glass India Pvt. Ltd., the dominant glass tubing producer in India. They alleged Schott abused its dominance through loyalty-based volume rebates favouring its joint venture partner Schott Kaisha, discriminatory functional discounts, margin squeeze pricing that undermined downstream competitors, and tying arrangements.

The CCI found SGI had abused its dominance, concluding the rebate schemes were exclusionary and imposed penalties. However, COMPAT overturned this decision entirely, holding the CCI failed to prove actual foreclosure or appreciable adverse effects on competition, finding the rebates commercially justifiable. The SC affirmed COMPAT's findings while clarifying that all findings of abuse under Section 4 must be based on an effects-based analysis.

It held that abuse cannot be inferred from the mere form or structure of a practice, such as the existence of rebates or differential pricing, without concrete evidence of actual or potential harm to the competitive process. It cited the Intel judgment of the Court of Justice of the European Union, as well as the European Commission’s 2009 Guidance on Article 102 TFEU (‘EC TFEU’), to support the need for evaluating market context, commercial justification, and foreclosure effects.

It emphasised that loyalty-based discounts are not per se abusive. Their legality depends on whether they produce exclusionary effects by foreclosing rivals from the market. It rejected the CCI’s finding, noting that the evidence did not support the claim that Schott’s input pricing rendered downstream conversion unviable and held that the CCI failed to prove that technical specifications or discounts were designed to exclude rivals or deny market access. The existence of alternative suppliers and market growth suggested otherwise. The Court accepted Schott’s explanations for its pricing policies, particularly the need to reward functional efficiencies and ensure stable supply relationships and held that such justification must be weighed before labelling conduct abusive.

The Schott Glass ruling is doctrinally significant for at least three reasons. First, it marks the Court’s first clear endorsement of an effects-based standard for establishing abuse under Section 4. The Court emphasised that a finding of abuse must be based on “hard evidence” of harm to the competitive process not merely the identity of the dominant firm or the structure of its conduct.

Second, the judgment implicitly affirms the principle that Section 4 is not a strict liability provision, and that dominance alone does not restrict a firm’s ability to compete aggressively, provided that such competition does not harm market structure or consumer welfare.

Third, it also offers implicit support for procedural rigor and economic reasoning in competition enforcement. By setting aside the CCI’s findings due to lack of evidence, the Court reinforced the importance of analytical standards, particularly in such complex vertical conduct cases involving pricing, rebates, and downstream integration.

IV. Analysis

While the SC in Schott Glass endorsed an effects-based standard for assessing abuse of dominance under Section 4, it provided no interpretive scaffolding on how such an analysis should be carried out. This omission poses practical challenges for both the CCI and the regulated entities. Without a defined methodological approach, there is a risk of regulatory inconsistency: different benches of the Commission may apply varying evidentiary thresholds, and businesses are left uncertain about which conduct will cross the threshold into illegality. The SC’S silence on such mechanics risks opening a doctrinal void, particularly since Section 4 lacks an AAEC clause, and the Act provides no alternative analytical template.

This ambiguity was explicitly addressed by Aditya Bhattacharjea in his observations to the 2019 Competition Law Review Committee (‘CLRC’) Report. Bhattacharjea argued that the interpretation of abuse under Section 4 should be tethered to a competitive effects test, similar in spirit to the AAEC inquiry under Section 3. Recognising that Section 4 lacks an enumerated framework, he proposed that Section 19(3), which lists factors for determining AAEC, could serve as a model for developing a structured analytical test.

Bhattacharjea’s proposal involved adapting Section 19(3)'s focus on barriers to entry, consumer benefits, improvement in distribution, and accrual of efficiencies, among other factors, to the context of dominance-based conduct. His concern was that without such an anchor, the assessment of abuse would remain ad hoc, potentially chilling competitive conduct by dominant firms. He further suggested that exploitative abuses, such as excessive pricing, also required economic evidence of harm, especially given the high risk of misclassification in such cases.

Such an approach would inject analytical consistency and transparency into CCI decision-making, while also allowing sufficient flexibility for evolving economic interpretations.

On the other hand, the Court’s refusal to prescribe a detailed framework may reflect a conscious choice of judicial restraint. Given the relative infancy of India’s effects jurisprudence, overly rigid doctrinal formulations from the bench may have prematurely bounded the scope of effects analysis, limiting the CCI’s capacity to experiment with economic reasoning across diverse factual scenarios.

An overly prescriptive judicial framework, especially if tied to a particular economic test, might have discouraged case-specific innovation, fossilized early enforcement, or worse, led to mechanical application of foreign templates without local relevance. India’s competition market structure, enforcement capacity, and regulatory maturity differ significantly from the EU and US contexts.

In this light, the Supreme Court may have missed an opportunity not in refusing to codify a test, but in failing to offer “indicative” or “non-exhaustive” guidance. Such guidance could have included:

- Types of evidence relevant to proving foreclosure or exclusion;

- The relevance of counterfactual market analysis;

- Recognition of commercial justifications and consumer benefit;

- The need for proportionality and balancing.

This middle path, an open-textured interpretive direction without ossifying enforcement, would have aided both legal predictability and regulatory discretion. The judgment’s sweeping endorsement of the effects-based standard raised another key ambiguity: Does this standard apply uniformly to both exclusionary and exploitative abuse?

Exclusionary abuse such as rebates, tying, and predatory pricing readily lends itself to effects-based analysis, since its anticompetitive nature is not always apparent on form. However, exploitative conduct raises more complex questions. First, should effects-based scrutiny require proof of market-wide consumer harm or distortion of price-quality dynamics? Second, how is “excessive” pricing to be determined in markets with high entry barriers and pricing asymmetries?

By failing to address this distinction, the Court leaves unclear whether exploitative abuses also require demonstrable market harm, or whether they may still be inferred from conduct alone. This open-ended ambiguity creates enforcement risk for both overreach and under-deterrence.

Another limitation of the Schott Glass judgment lies in its reliance on dated EU jurisprudence, most notably the Intel ruling and the 2009 EC Guidance. While these authorities endorsed the move away from form-based presumptions, they have since been refined and in some respects reconsidered.

The EC’s evolving guidance has steadily moved toward more structured tests. The 2009 EC TFEU introduced the as-efficient competitor (‘AEC’) test, market foreclosure thresholds, and rebuttable presumptions. The 2023 Draft Revision of the Guidance goes further by clarifying how the AEC test should be applied contextually, what constitutes “likely foreclosure”, the relevance of economic evidence, including cost benchmarks and consumer harm, and the distinction between manifestly exclusionary conduct and ambiguous strategies.

In failing to consider these developments, the Indian SC risks anchoring Indian competition law in a transitory phase of European jurisprudence. As Bhattacharjea and others have argued, India's courts and regulators must engage critically with comparative jurisprudence, rather than importing it uncritically. Otherwise, there is a danger of adopting economic standards misaligned with India’s institutional and market realities.

V. Conclusion

Schott Glass marks a key shift in Indian competition law, endorsing an effects-based test for abuse of dominance under Section 4. This brings India closer to global standards and prioritises evidence over formalism. However, the judgment’s silence on analytical frameworks and its reliance on dated precedents raise concerns about consistency and predictability.

Against this backdrop, Bhattacharjea’s suggestion to incorporate the AAEC factors from Section 19(3) into the Section 4 analysis offers a timely and workable path forward. It provides the kind of structured reasoning that Schott Glass notably omits. As India moves into this new phase of competition enforcement, the Court has set the direction but it is now up to policymakers and future courts to chart the terrain with clarity and consistency.

Saksham Agrawal is a law student at NLSIU, Bangalore.