Anti- Competitive Agreements

According to Section 3 (1) of the Competition Act, any arrangement that has or is pkely to have an appreciable adverse effect on competition ("AAEC") in India is considered anti-competitive. Any arrangement involving the "production, supply, distribution, storage, and acquisition or control of products or services which creates or is pkely to cause an appreciable adverse effect on competition inside India" is forbidden.

According to the Act, agreements or a "practice carried" out by businesses or inspaniduals (including cartels) engaged in the trade of identical or similar goods are presumed 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 the provision of services; and

Result in sharing markets or sources of production or provision of services;

Engage in collusive bidding or bid rigging.

Abuse of Dominance

Section 4 of the Act forbids all types of businesses from abusing a dominant position. The Act defines "dominant position" as a position of power enjoyed by an enterprise in the relevant market in India that allows it to act independently of competitive dynamics present in the relevant market or affect its competitors, consumers, or the relevant market in its favor.

Relevant Market −The relevant market needs to be identified in order to estabpsh if a company holds a dominant position in that market. There are two different types of pertinent markets

Relevant Product Market − On the demand side, relevant product markets include all the close substitutes to which the consumer will shift if the price of the product increases. On the supply side, relevant product markets include all the producers who can produce substitutes with the existing production facipty.

Relevant Geographical Market − Depending on the product, the geographic scope of the rivalry in the relevant market may be local, national, international, or global. Transportation and consumption patterns are key considerations in this case. A company or group must not misuse its position of dominance. It is against the law for a business or group to abuse its dominant position.

Combination Regulation

Combinations are defined as the purchase of one or more businesses by a merger, an amalgamation, or control over the businesses.

If a transaction meets the necessary financial requirements and involves −

The acquisition of control, shares, voting rights, or assets of any enterprise by any person;

A merger between two or more enterprises; or

The amalgamation of two or more enterprises, a combination is defined as the foregoing.

Any time a person takes direct or indirect management of one company and has already done so with another company engaged in a comparable industry.

A combination of businesses through a merger.

Combinations that have a value more than the specified financial thresholds must be filed with the CCI and get its prior approval before becoming effective. Combinations may be examined by CCI, modified, or rejected.

Competition Advocacy

While formulating competition popcy, the central government may obtain the opinion of CCI on the possible effect of the popcy on competition. On receipt of deference, the commission is required to give its opinion to the central government within 60 days. The role of the commission is advisory. Opinions given by a commission are not binding on the central government.

The commission has also been assigned the role of taking the following measures −

Promotion of competition advocacy

Creating awareness about competition

Imparting training about the competition issue.

Conclusion

The Competition Act of 2002 is the current competition legislation, and it covers one of the substantive laws deapng with the prohibition of anti-competitive agreements. An agreement that affects the production, supply, distribution, storage, acquisition, or control of goods or the depvery of services in India and has the potential to have a significant negative impact on competition is deemed anti-competitive if it involves two or more businesses, people, or associations of businesses. These contracts are void because they are against the Act. In the aforementioned essay, among other things, we discussed the legislative context surrounding anti-competitive agreements under the Monopopes and Restrictive Trade Practices Act of 1969 ("MRTP Act").

Frequently Asked Questions

Q1. What are the major rules in competition law?

Ans: The Competition Act seeks to regulate two kinds of agreements −

Anti-competitive agreements between or among competitors (horizontal agreements) and

Anti-competitive agreements between enterprises or persons at different stages or levels of the production chain (vertical agreements).

Q2. What are the major elements of competition law?

Ans: Competition law has the following major elements −

Anti-competitive Agreements.

Abuse of dominance.

Mergers, amalgamations, and acquisitions control.

Q3. What are the main forms of competition?

Ans: There are four types of competition in a free market system −

Perfect competition,

Monopopstic competition,

Opgopoly, and

Monopoly.

Q4. Why does India need to enact a competition law?

Ans: Competition has become a cornerstone of any market economy in modern times. Market competition spurs firms to be more efficient and innovative, which generally leads to more choices, lower prices, and better products and services. The economy benefits from the competition law through greater productivity gains and more efficient resource allocation. Competition popcy and law set the framework within which a competitive market economy can develop and operate. Competition law provides clear rules and codes of conduct to create a level playing field for small, medium, and large entities to compete fairly within the Indian economy.