I. INTRODUCTION TO ANTI-COMPETITIVE AGREEMENTS

“True economic freedom cannot exist without effective Competition and Investment Regime”. To achieve this objective Government of Indian enacted the competition Act, 2002 which prohibits anti-competitive agreements, abuse of dominant position and regulates combinations.
The Framework of Competition Act 2002 has essentially four anchors:

1. Prohibition of Anti-Competitive Agreements [Section 3]
2. Prohibition of Abuse of Dominant Position [Section 4]
3. Regulation of Combination- Merger & Amalgamations, Takeovers etc. [Section 5 & 6]
4. Competition Advocacy [Section 49]

The anchors can be further sub-classified under two categories:
a) Behaviour-Oriented- Deals with the past agreements between enterprises like anti-competitive agreements and abuse of dominant position
b) Structure-Oriented- Deals with future agreements between enterprises such as Merger & Amalgamation, Takeovers etc.

II. WHAT DOES ANTI-COMPETITIVE AGREEMENT MEANS? [Section 3]

Any agreement for goods or services which has an appreciable adverse effect on competition in India is prohibited. These kinds of agreements are known as anti-competitive agreements. Anti Competitive Agreements if entered into shall be void.

Anti Competitive Agreement Prohibition: Section 3 (1) of the Act states that:
“No enterprise shall enter into any agreement with respect of production, supply, distribution, storage, acquisition or control of goods/provision of services, which causes or is likely to cause appreciable adverse effect on competition within India”

Thus, there are two essential requirements of Anti-Competitive Agreements:
i. There should be an agreement.
ii. Such agreement must cause or is likely to cause an appreciable adverse effect on competition in a relevant market in India. The relevant market may be a geographical or the market of a product.

III. TYPES OF ANTI-COMPETITIVE AGREEMENTS

There are two kinds of anti-competitive agreements viz.
1. Horizontal Anti Competitive Agreements [Section 3(3)]
2. Vertical Anti Competitive Agreements [Section 3(4)]

IV. HORIZONTAL ANTI-COMPETITIVE AGREEMENTS [SECTION 3(3)]

They are agreements between parties in the same line of production. Example of horizontal anti competitive agreements could be- An Agreement between Manufactures, Agreement between Distributors. Horizontal agreements are presumed to have appreciable adverse effect on competition if they:

1. directly or indirectly determine purchase or sale prices;
2. limit or control output, technical development, services etc.;
3. share or divide markets
4. indulge in bid-rigging or collusive bidding

Types of Horizontal Anti-Competitive Agreements:
1. Price-Fixing Agreements [Section 3(3)(a)]
2. Limiting Or Controlling Production And Investment [Section 3(3)(b)]
3. Market Allocation And Sharing [Section 3(3)(c)]
4. Bid Rigging Or Collusive Bidding [Section 3(3)(d)]

V. VERTICAL ANTI-COMPETITIVE AGREEMENTS

Vertical anti competitive agreements are entered between two or more companies each of which operates, at a different level of production or distribution chain, and relating to conditions under which the parties may purchase, sale or resell certain goods or services.

Example of vertical anti competitive agreement could be ‘An agreement between manufacturer and supplier’ or between ‘Producers and Whole-Sellers’ or between ‘Producers, Wholesalers and Retailers’.

Types of Vertical Anti Competitive Agreements:
1. Tie-In Arrangement- Imposing a condition on the purchaser of goods, to purchase some other goods and thus selling goods which is not of purchaser’s choice. For Example: Requiring a person to keep FD with the Bank while offering him a locker, Requiring a stabilizer to be bought along with the refrigerator.
2. Exclusive Supply Arrangement-An agreement restricting the purchase in course of trade from acquiring the goods of any other seller (e.g. restricting a purchaser in the course of his trade from dealing in any goods other than those of the seller).
3. Exclusive Distribution Arrangement- Agreement to limit or restrict the output or supply of any goods to any market or area (e.g. limiting/restricting supply of goods or allocate any area or market for the sale of goods).
4. Refusal To Deal- Restricting by any method any person/classes of persons to whom goods are sold.
5. Resale Price Maintenance- Selling goods with the condition to resale at stipulated prices.

VI. HORIZONTAL VS VERTICAL ANTI-COMPETITIVE AGREEMENTS