Anti-competitive agreement
The Anticompetitive agreement is an agreement whereby two or more companies or parties operating as a competitor in the same market agrees to do something together like, for example, fixing of price or something that can result in the reduction of competition for both the companies and that can be beneficial for both the companies or parties. Generally while doing business in India the parties are restricted or prohibited from entering or executing an Anti-competitive agreement as the agreement causes or likely to cause an appreciable adverse effect on the competition and such agreement, therefore, are called as anti-competitive agreement.
The regulation for Anticompetitive practices in India is ingrained under the section 3 (1) of the Competition Act 2002 prohibits the agreement which is likely to cause a considerable adverse effect on the competition within India this section also says no enterprise or company or person or Association of person and shall enter into an agreement concerning the production, supply, distribution, storage, acquisition or control of goods or provision of service if it causes or there is any possibility to give a negative impact on the market.
The section 3(2) of Competition Act 2002 for the declares that if an agreement entered into which is contrary to 3(1)Then such agreement shall be declared void.
The presumption of adverse effect on competition relating to the anti-competitive agreement is defined under Section 3(3) which says if an agreement determine the following
• If an agreement involves directly or indirectly purchase or sale price
• if an agreement determine the limits or control the supply products in the market technical development investment or provision of service
• If an agreement shares the market or source of production or provision of service employing a location of geographical areas of the market or by the types of goods or services or numbers of customers in the market and
• If an agreement directly or indirectly results in bid-rigging all or collusive bidding.
The Anticompetitive agreement is of 2 types:
Horizontal agreement
vertical agreement
Horizontal Agreement: a horizontal agreement is that agreement which is between the enterprise at some stage of the production chain. That is generally between two rivals for either fixing of price or limiting production or for sharing market in such agreement there is a presumption of the act. The agreement is either causing or likely to cause an adverse effect on competition in the market. The cartel is also a horizontal agreement.
Vertical agreement: vertical agreement are those agreed between the parties on a different level of the chain of distribution or competition such as between the manufacturer and distributor or between the wholesaler and retailer as they are at a different level of the supply chain