All About Anti-Competitive Practices under Indian Competition Law

22 Aug 2018  Read 2819 Views

Anti-competitive practices refer to an all-embracing range of business practices in which a firm or group of firms may fit into place in normalize to restrict inter-firm competition to keep up or amplify their family member market place and profits lacking necessarily providing goods and services at a lower cost or of elevated eminence.

Competition law intends to promote or seeks to achieve fair market by eliminating bendable anti-competitive demeanor as a result of companies. Competition law is implemented throughout public and private enforcement.

Anti-Competitive Agreements Section 3 of the Competition Act states that any agreement which causes or is possible to cause an Appreciable Undesirable Effect (AUE) on competition in India is deemed anti-competitive.

Section 3 (1) of the Competition Act prohibits any agreement with deference to “production, supply, distribution, storage, and acquisition or control of goods or services which causes or is likely to cause an appreciable adverse effect on competition within India”.

Even though the Competition Act does not characterize AAEC and nor is there any thumb rule to establish when an agreement causes or is likely to cause AAEC, Section 19 (3) of the Act specifies definite factors for influential AAEC. The intention of the legislature reflected vide the obligatory verbal communication of Section 19 (1) of the Act is that the CCI is required to carry an unbiased evaluation of anti-competitive product as fighting fit pro-competitive rationalization of the agreement. As affirmed greater than AAE is not definite but Section 19 (3) provides the subsequent factors that the CCI must have outstanding scrutinize to which crucial whether an agreement has an AAEC under Section 3:

  • Conception of barriers to new entrants in the market;
  • Driving accessible competitors out of the market;
  • Foreclosure of competition by hindering entry into the market;
  • Accrual of reimbursement to consumers;  
  • improvements in construction or giving out of goods or provision of services;
  • Promotion of technical, scientific and economic development by means of production.

The language in section 19(3) states that the CCI shall have ‘unpaid regard to all or any’ of the aforemen­tioned factors. In the adjudications that have been analyzed by us underneath, we note that the CCI has examined the allegations and substance on record as against the elements of Section 19(3) as set out above. However, in Automobiles Dealers Association v. Global Automobiles Limited & Another, CCI held that it would be cautious to scrutinize an action in the surroundings of all the factors mentioned in Section 19(3).  

Section 3(3) of the Competition Act provides that agreements or a ‘practice carried’ on by enterprises or persons (including cartels) unavailable in trade of equal or comparable products are acknowledged to have AAEC in India if they:-

  • Directly or indirectly fix purchase or sale prices;
  • Limit or control production, supply, markets, technical development, investments or provi­sion of services;
  • Consequence in distribution markets or sources of production or provision of services;
  • Coddle in bid-rigging or collusive bidding.

The first three types of conducts may comprise all firms in a market, or a majority of them, coordinating their business, whether vis-à-vis price, geographic market, or output, to successfully act like a monopoly and share the monopoly profits accrued from their involvement. The fourth type of cartelized behavior may involve competitors collaborating in some way to restrict competition in response to a tender invi­tation and might be a combination of all the other practices.

The bare omission to this per-se rule is in the nature of joint venture planning which augment effi­ciency in terms of production, supply, distribution, storage, acquisition or control of goods or services. Thus, there has to be a direct relationship between cost and quality efficiencies the agreement and benefits to the consumers must at least compensate consumers for any actual or likely negative impact caused by the agreement.

Section 3(4) of the Competition Act provides that any agreement surrounded by enterprises or persons at dissimilar stages or levels of the production chain in different markets, in admiration of production, sup­ply, distribution, storage, sale or price of, or trade in goods or provision of services, including tie-in arrangement, fashionable supply agreement, exclusive distribution agreement, refusal to deal and resale price maintenance shall be an agreement in contravention of Section 3(1) if such agree­ment causes or is expected to cause a significant difficult effect on competition in India. As can be reason, these agreements are not deemed anti-competitive. Only if they grounds or are likely to grounds an AAEC in India will these agreements be in infringement of section 3(1) of the Competition Act. The rule of motivation must be applied in this willpower.

About the Author: Ratan Deep Singh | 7 Post(s)

Ratan is a Biotechnology graduate and a former print-media Journalist, who specialized in marketing to take up Brand Communication. He’s a grammar Nazi & big-time foodie who appreciates creativity and often tries his hand in creative poetic writing.

Liked What You Just Read? Share this Post:

Finology Blog / Legal / All About Anti-Competitive Practices under Indian Competition Law

Wanna Share your Views on this? Comment here: