The SC's Schott Glass verdict struck bullseye in favour of policy certainty

Mint

26-05-2025

There's a temptation that afflicts every regulator over time: the urge to intervene. Like the man with a hammer who sees everything as a nail, some regulators across the globe begin to see their relevance lying in their reach, not their restraint. They start mistaking regulation for virtue and enforcement for wisdom. Markets, in their view, are suspect until proven innocent.
India, which aims to be a global hub for manufacturing and innovation, can ill afford such regulatory excess. When enforcement diverges from economic logic, when success itself is treated as suspicious, we risk turning the very institutions meant to foster growth into instruments that stifle it.
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This is the context in which the Supreme Court's (SC) recent judgment in Competition Commission of India vs Schott Glass India Pvt Ltd must be seen. Fortunately, it is a principled reaffirmation of how regulation must serve economic freedom, not strangle it.
For over 15 years, Schott Glass India faced allegations of abusing its market position. Its rival, Kapoor Glass, accused it of exclusionary discounts, discriminatory terms and selective supply refusals. The Competition Commission of India (CCI) agreed, imposed a hefty fine and issued a cease-and-desist order.
But what the SC found after a forensic examination of the case was telling: the CCI's conclusions were not built on proof, but on presumption. The regulator had relied on untested statements, outdated correspondence and a startling absence of economic harm analysis. It had denied Schott a chance to cross-examine adverse witnesses and failed to assess whether consumers or competitors were actually harmed.
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The SC ruling exposed a deeper institutional failing—a regulatory tendency to punish dominance without proving abuse, treat scale as suspicious and bypass due process in pursuit of outcomes.
In doing so, the SC gave India's regulation of competition doctrinal clarity. For the first time, it categorically affirmed that Section 4 of the Competition Act must be interpreted through an 'effects-based" lens. In plain terms, it's not enough to show that a firm is dominant or aggressive; regulators must prove that its conduct harms the competitive process by limiting choice, raising prices or deterring market entry.
The goal of an antitrust law is not to humble the successful, but ensure conditions under which others can succeed too. Dominance is not illegal. It becomes problematic only when it is abused to block rivals unfairly or harm consumers. Schott, the SC noted, did neither. No converter exited the market. Prices were stable. Imports actually rose. Schott's volume-based rebates were tied solely to the quantity purchased and applied uniformly across buyers.
Such scale-based discounts, the SC noted, are not only economically rational, but also enhance efficiency, letting firms transmit savings downstream and reduce prices for consumers. The rival alleging harm, Kapoor Glass, offered no credible proof of exclusion.
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In today's world, where global capital is cautious and geopolitical conditions are shifting, India's credibility as an investment destination rests on the predictability and fairness of its regulatory institutions. This judgment, unlike some others, strengthens that credibility. It also indicates a need for systemic reform, which must come from within regulatory bodies. The CCI must invest in better economic expertise, adopt a more rigorous evidentiary framework and ensure procedural fairness not as an afterthought, but as a foundational principle.
There will be four implications of Schott judgment.
First, it settles that abuse of dominance under India's competition law requires proof of actual harm, not just of large operational scale or market share. While the ruling endorses an effects-based standard, it stops short of laying out a clear framework (rightly so). Still, with this principle affirmed, the CCI can use it for a clear framework.
Second, regulators must improve procedural rigour. The judgment rebukes the CCI for denying cross-examination and relying on biased untested testimony. Natural justice is a non-negotiable part of competition inquiries.
Third, investor confidence gets a boost: The verdict sends a reassuring message to global and domestic investors that success will not be prosecuted and India protects lawful enterprise.
Fourth, weaponization of competition law has been curtailed to an extent. The decision sets a precedent that commercial grievances cannot masquerade as competition complaints. This will likely reduce frivolous or malicious filings aimed at competitors.
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Importantly, the Schott verdict restores predictability of case outcomes. In a world where capital moves at the speed of doubt, businesses don't fear regulation, but arbitrariness. India's ease of doing business will not be built on slogans or rankings, but on a steady assurance of policy certainty, where the rules are clear, enforcement is fair and success is not punished for its own sake.
But for this to endure, India must not stand in the way of businesses seeking scale. We cannot build a $5 trillion economy while treating scale with suspicion. Large firms are not the enemy of competition; they are often its most visible outcome. To demonize them is to punish success and reward mediocrity.
The SC has rightly drawn the line between market dominance and abuse. But this line must be guarded in every future ruling, not just honoured in this one.
These are the authors' personal views.
The authors are, respectively, a public policy professional, and assistant professor of economics at the Faculty of Management Studies, University of Delhi.