Understanding Anti-Competitive Agreements in India

In India, competition law aims to prevent practices that harm competition in the market. One key area it addresses is anti-competitive agreements. An agreement is considered anti-competitive and void if it is related to production, supply, distribution, storage, acquisition, or control of goods or provision of service and causes or is likely to cause an appreciable adverse effect on competition (AAEC) in India.

The Competition Act, 2002, specifically identifies certain types of agreements that are likely to have an AAEC. These are listed under Section 3 of the Act. Let's look at the types of agreements mentioned in the question:

• A. Tie-in arrangement: This is an agreement that requires a purchaser of goods or services to purchase some other goods or services as a condition of such purchase.
• B. Exclusive supply agreement: This involves restricting the buyer in any manner from purchasing or otherwise dealing with goods or services other than those of the seller or any other person.
• C. Exclusive distribution agreement: This agreement limits, restricts, or withholds the output or supply of any goods or allocates any area or market for the disposal or sale of the goods.
• D. Refusal to deal: This involves restricting, or likely to restrict, by any method, the persons or classes of persons to whom goods or services are sold, or from whom goods or services are bought.
• E. Resale price maintenance: This occurs when a seller requires a purchaser of goods to sell the goods at a price stipulated by the seller, unless it is made clear that prices lower than those stipulated may be charged.

The Competition Act presumes that the types of agreements listed above, if they occur between enterprises or persons at different stages or levels of the production chain in different markets (known as vertical agreements), are likely to cause an AAEC. Therefore, if any of these agreements are found to cause or be likely to cause such an effect on competition in India, they are considered void under the Act.

Based on the provisions of the Competition Act, 2002, all the mentioned types of agreements — Tie-in arrangement, Exclusive supply agreement, Exclusive distribution agreement, Refusal to deal, and Resale price maintenance — fall under the category of agreements that can cause an appreciable adverse effect on competition in India and thus can be deemed void.

Revision Table: Types of Anti-Competitive Agreements

Additional Information on Competition Law in India

The primary legislation governing competition in India is the Competition Act, 2002. The Act prohibits three main types of anti-competitive practices:

1. Anti-competitive agreements (Section 3)
2. Abuse of dominant position (Section 4)
3. Combinations (mergers, acquisitions, etc.) that cause or are likely to cause AAEC (Sections 5 & 6)

The Competition Commission of India (CCI) is the statutory body responsible for enforcing the Competition Act. It investigates cases, holds inquiries, and passes orders to prevent and penalize anti-competitive conduct.

The concept of "Appreciable Adverse Effect on Competition" (AAEC) is central to determining whether an agreement or conduct is prohibited. The Act provides factors to be considered when assessing AAEC, including:

• Creation of barriers to new entrants in the market.
• Driving existing competitors out of the market.
• Foreclosure of competition by hindering entry into the market.
• Accrual of benefits to consumers.
• Improvements in production or distribution of goods or provision of services.
• Promotion of technical, scientific, and economic development through production or distribution of goods or provision of services.

Vertical agreements, like the ones listed in the question, are examined based on whether they cause or are likely to cause AAEC considering these factors. If they do, they are considered void.