Definition
Countervailing Buyer Power refers to the ability of a buyer to affect or influence the conditions of competition for a supplier. As the name suggests, it refers to the power of a buyer to ‘countervail’ or offset the market power of a seller. The concept is used to assess market power and establish dominance in antitrust enforcement and, to determine the effect of a combination on competition in the market in merger control.
It exists in markets where the buyers are sufficiently large (in terms of size and resources, market share etc.) and credible alternatives exist to switch suppliers1, self-supply or sponsor new entry in the market.
Effect on the market: If countervailing buyer power exists, it means that strong buyers exist in the market who can constrain or offset the market power of sellers thereby reducing the likelihood of harm to competition in the market. The effect of countervailing buyer power can be seen in the form of negotiating better prices, quality or other commercial terms.
Statutory provisions: In India, ‘countervailing buyer power’ finds mention at two places in the Competition Act, 2002 (“Act”), to be considered by the Competition Commission of India (“CCI”) as a factor under:
Section 19(4)(i) of the Act to enquire whether an enterprise enjoys a dominant position in the relevant market and;
Section 20(4)(c) of the Act to determine whether a combination would have the effect of or is likely to have an appreciable adverse effect on competition in the relevant market.
Thus, countervailing buyer power acts as a constraint on dominance and a competitive force to mitigate anticompetitive effects in case of combinations.
Commentary
Origin of the term
The concept traces its origin to John Kenneth Galbraith’s theory which challenged the classical view that competition between sellers is the only effective restraint on market power, by arguing that buyers have an incentive to neutralize the market power of a seller to reap rewards and develop a power to defend themselves against exploitation.2
Dimensions of countervailing buyer power
Countervailing buyer power is concerned with how downstream firms can affect the terms of trade with upstream suppliers. In this context, it has two distinct dimensions based on the source and effect of the buyer power being exercised3:
monopsony power – A firm has monopsony power if the market share of the buyers is sufficiently large enough such that if it purchases less, it can force the seller to lower the price of the goods or services.
bargaining power – A firm has bargaining power if it has sufficient strength to ‘bargain’ the terms of goods and services being offered by a seller.
Thus, both types of buyer power can have the effect of lower prices, and it is only that “the lower price obtained from monopsony power is achieved through the act of purchasing less, whereas the lower price obtained from bargaining power is achieved through the threat of purchasing less”.4
Illustrative cases: dominance assessment under Section 4 of the Act
In Kapoor Glass Private Limited v. Schott Glass India Private Limited 5, the CCI was inter alia concerned with alleged anticompetitive and abusive conduct of Schott Glass (a glass tube manufacturer) in the upstream market of borosilicate glass tubes and downstream market of ampoules, vials, cartridges, syringes, etc. To vertically integrate its operations with the downstream manufacturing business, Schott Glass entered into a joint venture agreement with a downstream manufacturer Kaisha Manufacturers Pvt Ltd to form Schott Kaisha Private Ltd (Schott Kaisha). The CCI found that all other convertors except Scott Kaisha lacked the requisite size or financial strength to exercise countervailing buying power and were dependent on Schott for their supplies. Hence, the CCI held that Schott was dominant in the upstream market and Schott Kaisha was dominant in the downstream market.
Although in appeal the Competition Appellate Tribunal6, and subsequently the Supreme Court set aside the findings of CCI on discriminatory treatment since the same was objectively justified, the analysis of countervailing buyer power was explicitly affirmed. The Supreme Court observed Schott Glass held a dominant position in the relevant market because there was no countervailing buyer power since the convertors (barring the joint venture Schott Kaisha) were fragmented, purchased modest volumes and were “heavily dependent on Schott India” due to the insistence of pharmaceutical companies to purchase branded tubing.7
Similarly, in XYZ and Ors v. Alphabet Inc. and Ors 8, the CCI found that original equipment manufacturers (“OEMs”) lacked sufficient countervailing buyer power vis-à-vis Google. The large established user base of Android devices, contributing to strong network effects made the Android ecosystem offered by Google attractive to OEMs and app developers. Since Android OS enjoyed significant consumer demand in the relevant market, OEMs were not able to develop/identify alternatives to compete with Android OS and had no option but to comply with Google’s agreements, even if the terms were unilateral and unfavourable to them. Hence, this illustrates a case where there was no bargaining power.
Illustrative cases: combination assessment under Sections 5 and 6 of the Act
In AGI Greenpac Limited/Hindusthan National Glass & Industries Limited,9 both parties were the only significant organized players in the market for container class. AGI submitted that since the customers in the glass segment were large conglomerates with deep pockets and the suppliers were dependent on these customers, there was no question of the parties being able to act independently of competitive force post the combination. However, the CCI observed that ‘countervailing buyer power is considered more a function of relative differences in concentration on the demand and supply side rather than just the size of customers, unless vertical integration trends are clearly discernible’. In the said case, it was difficult for customers to switch suppliers because of the concentrated nature of the glass market, a condition which would be exacerbated post the proposed combination. Hence, the CCI held that since the parties were the biggest players in the market, countervailing buyer power was limited, and the proposed combination implied the elimination of the most credible option to switch for customers. It eventually allowed the combination after directing suitable remedies.
Thus, the question to ask is whether the proposed combination is likely to affect the buyer power, if any, enjoyed by the buyers and whether it would make them more dependent on the parties post the combination, thereby resulting in a likelihood of causing appreciable adverse effect in the relevant market.10
Illustrative parallel legal provisions in European Union
The analysis of dominance under Article 102 of the Treaty on Functioning of the European Union11 and European Commission’s guidelines on merger regulations12 incorporates assessment of countervailing buyer power.
Harshita Chawla v. WhatsApp Inc. and Facebook Inc. [2020] CCI Case No. 15 of 2020.↩︎
Galbraith, John Kenneth, American Capitalism: The Concept of Countervailing Power (first published in 1952 by Houghton Mifflin Company, Routledge 2017).↩︎
Competition Committee, ‘Monopsony and Buyer Power’ (OECD 2009) DAF/COMP(2008)38 <https://www.oecd.org/content/dam/oecd/en/publications/reports/2009/12/monopsony-and-buyer-power_cf60bdd1/36a2b824-en.pdf> Accessed 25th April 2026.↩︎
Ibid.↩︎
Kapoor Glass Private Limited v. Schott Glass India Private Limited, [2012] CCI Case No. 22 of 2010.↩︎
Schott Glass India Pvt. Ltd v. CCI, [2014] Comp AT 1.↩︎
CCI and Ors. v. Schott Glass India Pvt. Ltd. & Anr. [2025] INSC 668.↩︎
XYZ and Ors v. Alphabet Inc. and Ors. [2022] CCI Case Nos 07 of 2020, 12 of 2021 and 35 of 2021. In appeal in Alphabet Inc and Ors. v. CCI and Anr. [2025] NCLAT Competition Appeal (AT) No. 04 of 2023, some of the remedies directed by the CCI were set aside by the National Company Law Appellate Tribunal, however the findings on dominance of Google on account of absence of countervailing buyer power were sustained and remain good in law.↩︎
AGI Greenpac Limited, [2023] CCI Combination Registration No. C-2022/11/983.↩︎
Bharat Forge Limited and AAM India Manufacturing Corporation Private Limited, [2025] CCI Combination Registration No.C-2024/10/1197.↩︎
European Commission, Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings [2009] (2009/C 45/02), Paras 12 and 18.↩︎
European Commission, Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings [2004] (2004/C 31/03), Guideline V; European Commission, Guidelines on vertical restraints [2022] (2022/C 248/01), Guideline 8.2.1, Para 306.↩︎
