Home       Top Rated       Submit Article     Advanced Search     FAQ       Contact Us       Lawyers in India       Law Forum     RSS Feeds     

Register your Copyright Online

We offer copyright registration right from your desktop click here for details.

Latest Articles | Articles 2014 | Articles 2013 | Articles 2012 | Articles 2011 | Articles 2010 | Articles 2009 | Articles 2008 | Articles 2007 | Articles 2006 | Articles 2000-05

Search On:Laws in IndiaLawyers Search

Mutual Consent Divorce in Delhi
We provide fast, cost effective and Hassle free solution.
Contact us at Ph no: 9650499965 (Divorce Law Firm Delhi)

E-mail login                       Password
     

Free Email Sign Up

Main Categories
 Accident Law
 Arbitration
 Aviation Law
 Banking and Finance laws
 Case Laws
 Civil Laws
 Company Law
 Constitutional Law
 Consumer laws
 Contracts laws
 Criminal law
 Drug laws
 Dubai laws
 Educational laws
 Employment / Labour laws
 Environmental Law
 family law
 Gay laws and Third Gender
 Human Rights laws
 Immigration laws
 Insurance / Accident Claim
 Intellectual Property
 International Law
 Juvenile Laws
 Law - lawyers & legal Profession
 Legal Aid and Lok Adalat
 Legal outsourcing
 Media laws
 Medico legal
 Miscellaneous
 Real estate laws
 Right To Information
 Tax Laws
 Torts Law
 Woman Issues
 Workplace Equality & Non-Discrimination
 Yet Another Category

More Options
 Most read articles
 Most rated articles

Subscription
Subscribe now and receive free articles and updates instantly.

Name
Email



Copyright Registration

To Copyright Your Books, Videos, Songs, Scripts etc
Call us at: 9891244487 / or email at: admin@legalserviceindia.com
Top Law Colleges

Law Updates:

# Income-Tax
# Family law
# Company Law
# Constitutional Law
# Partnership firms
# Immigration Law
# Cyber Law
# Lok Adalat, legal Aid & PIL
# Forms
# Trademarks
# Woman issues
# Medico Legal
# Consumer laws
# Criminal laws
# Supreme Court Judgments


Published : July 31, 2013 | Author : Tilotma
Category : Contracts laws | Total Views : 4754 | Unrated

  
Tilotma
Pass out from NLC, Bharati Vidpapeeth University, Pune
 

Anti Competitive Agreements and whether Consumers can be a Party to such Agreements?

The ideal market is the one in which various market participants are independent and act as competitive restrain on each other. This economic liberty of market participants is sine qua non for preserving free and unfettered competition in any market. Some time the market participants with an objective to make more money instead of competing with each other on merits may enter into agreements to restrict competition. The words of Adam Smith that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices” are still applicable and to some extent true even today. Section 3 of the Competition Act, 2002 (hereinafter referred as the Act) seeks to prohibit such agreements.

This article attempts to study and analyze various provisions related to anti competitive agreements contained under the Act. The author also deals with the issue as to whether consumers can be a party to anti competitive agreements.

2. Anti Competitive Agreements
Section 3 of the Act prohibits and also declares the agreements between two or more enterprise or person or association of persons, which have an appreciable adverse impact on the competition as void. The section, further categorizes agreements into two categories, namely –

2.1 Horizontal Agreements

These kinds of agreements are known as horizontal agreements because the parties to the agreement are at the same level of production in the same market. According to Section 3(3) certain agreements between enterprises, decisions by associations of enterprise including cartels engaged in identical or similar trade of goods or provision of services are presumed to have an appreciable effect on the competition, which –

a) directly or indirectly determines purchase or sale prices;

b) limits or controls production, supply, markets, technical development, investment or provision of services;

c) shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way;

d) directly or indirectly results in bid rigging or collusive bidding,

These kinds of agreements are per se illegal and it is not necessary to show that the agreement in the issue is anti-competitive or not. A typical example of anti competitive horizontal agreement would be agreement between two manufacturers of coal that they will not compete on price with each other.

2.2 Vertical Agreements
Vertical agreements are those agreements which are amongst enterprises or persons at different stages or levels of the production chain in different markets. These agreements are not per se illegal and in order to establish that they are anti-competitive it must proved that such agreement causes or is likely to cause an appreciable adverse effect on competition in India.

The judicial pronouncements in US have evolved the “rule of reason” approach to ascertain whether a vertical agreement has adverse effect of competition. The rule of reason demands a proper inquiry whether the challenged agreement is one that promotes or the one that suppresses the competition. Agreements are considered illegal only if they result in unreasonable restrictions on competition. The Act on the other hand as such does not define the term appreciable effect on competition but under Section 19 (3) provides some factors all or any of which may be considered while determining whether an agreement has an appreciable adverse effect on competition. These factors are -

a) creation of barriers to new entrants in the market;
b) driving existing competitors out of the market;
c) foreclosure of competition by hindering entry into the market;
d) accrual of benefits to consumers;
e) improvements in production or distribution of goods or provision of services;
f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.

A careful reading of Section 19 (3) reveals that this sub-section performs the same function as performed by “rule of reason” approach while analyzing the effect of an agreement on the competition. Under section 19 (3) clause (a) to (c) analyses the anti-competitive effects and clause (d) to (f) on the other hand analyze the pro-competitive effects of an agreement on the competition within India.

3. Whether Consumers can be party to Anti Competitive Agreements
The Section 3(1) of the Act inter alia prohibits an agreement between an enterprise and a person causing or is likely to cause an appreciable effect on competition within India. As the definition of person under the Act includes an individual, it leads to possible interpretation that consumers can be a party to anti-competitive. This proposition contradicts with the whole philosophy of competition law behind prohibiting anti competitive agreements, but still the Act nowhere negates this proposition on the other hand seems to support it.

If this preposition is answered in affirmative, it may have multi dimensional adverse implications on contractual relations. For instance a consumer will be able to avoid a contract if subsequently such contract is proved to be anti competitive. This not something which the Competition Commission doesn’t the power to do, in fact the Commission in the case of Belarie Owners Association v. DLF Ltd. & HUDA has directed DLF to modify unfair conditions in a properly entered contract. However the rationale behind this decision was that by imposing such unfair terms the DLF has abused its Dominance and not on the ground of such agreement being anti-competitive.

The issue as to whether consumers can be party to anti competitive agreements was raised before Competition Commission in the case of Yashoda Hospital and Research Centre Ltd. v. India Bulls Financial Services Ltd. (IFSL). The Commission held that for application of Section 3 there must be two or more enterprises and there must be an agreement between them. While adjudging the same issue the Gujarat High Court in case of Jai Balaji Industries Ltd. & Ans. v. Union of India has observed that the Consumers have no role to play in anti-competitive agreements. Thus, after these judicial pronouncements it is well established that a consumer can’t be party to any anti competitive agreement as prohibited under Section 3 of the Act.

4. Conclusion
The regulation of anti competitive agreements by the Act has perceptible loopholes and could be strengthened further. Moreover, the Act has some inherent ambiguities which must be rectified. However, if taken as a whole the Act is good step in the direction of preserving free and fair trade in India and efforts of Government for creating a effective legal framework through which anti competitive behaviour of firms can be easily detected and prevented from hindering the competition certainly deserves appreciation.
******************
# See Adam Smith, “The Wealth of Nations” (1776)
# 2011 CompLR 0239 (CCI)
# 2011CompLR0324(CCI)
# AIR2011Gau109

The  author can be reached at: tilotma@legalserviceindia.com




1 2 3 4 5
Rate this article!     Poor
Excellent    

Most viewed articles in Contracts laws category
• Void & Voidable Agreements
• Privity of contract & third party beneficiary in a contract
• Specific performance of Contracts
• Wagering Agreements
• Regulation of Contract Labour
• Perspectives on Contract Labour Act
• Standard form of Contract
• Indemnity in a contract
• Nemo Dat Quod Non Habet
• Pre-incorporation contracts
• Contract Ratification
• Fundamental Breach of Contract
• Time is the essance of the Contract
• Contract- II: Bailment
• Joint & Several Liability
• Standard Form Contract
Most recent articles in Contracts laws category
• Government Contracts
• Offer in a Contract
• Standard Form of Contracts: Effect Of Unequal Bargaining Power
• John Lockes Social Contract Theory
• Rescission of contract
• Nemo Dat Quod Non Habet
• Comparative Analysis of a Treaty Governed By Vienna Convention And A Contract Regulated by Indian Contract Act
• Fundamental Principles of Contract Drafting
• Importance of Consideration in Contract
• Anti Competitive Agreements and whether Consumers can be a Party to such Agreements?
• Position Finder of Goods under Indian Contract Act
• Deemed Sale
• A Legal Perspective on Public Private Partnerships in India
• Study of Contractual Documents Involved In Yamuna Expressway Project
• Perspectives on Contract Labour Act
• Fundamental Breach of Contract

Article Comments

there are no comments...

Post Your Comments
Name

Email

Your comments

Note : Your email address is only visible to admin, other members / users cannot see it.

You can use following FXCodes


BOLD : [b]
Italic : [i]

[b] Legal Services India [/b] is a [i]nice website[/i].
[url= http://www.legalservicesindia.com/article/ ]click here to visit.[/url]

Legal Services India is a nice website.
Click here to visit

 

Note : Currently, user comments are moderated and will be posted only after approval.



Welcome!
Please login or register a new free account.

Random Pick
The increasingly complex and elusive media landscape has thrown fresh challenges to an unsettled ecosystem of media policy in India. Advanced communications technologies have fundamentally altered the ways in which information and meanings are delivered, organized and received. These new advancements call into question the efficacy of existing policy approaches to media, including the still-dominant conventional media. The multiple bills introduced in the last decade reveal a fragmented framework shaped as much by the Indian state’s staggered acquiescence to corporate interests as by the entrenched colonial structures of governance aimed at “reining in” the media, or using the technologies for targeted surveillance. Regulatory authority is currently divided between several government departments, even as the Communication Convergence Bill (2001) and Broadcasting Service Regulation Bill (2007) are still far from realizing their stated objective of introducing a comprehensive and coherent policy framework. It is thus one of the most crucial moments for media policy discussions to funnel their energy towards a meaningful debate, since the unsettled character of today’s advanced communication systems is not our burden; it is our chance to act.

Statistics
» Total Articles
1375
» Total Authors
3989
» Total Views
15549639
» Total categories
40

Law Forum


Legal Articles

Lawyers in India- Click on a link below for legal Services

lawyers in Chennai
lawyers in Bangalore
lawyers in Hyderabad
lawyers in Cochin
lawyers in Pondicherry
lawyers in Guwahati
lawyers in Nashik

lawyers in Jaipur
lawyers in New Delhi
lawyers in Dimapur
lawyers in Agra
Noida lawyers
lawyers in Siliguri

For Mutual consent Divorce in Delhi

Ph no: 9650499965
For online Copyright Registration

Ph no: 9891244487
Law Articles

lawyers in Delhi
lawyers in Chandigarh
lawyers in Allahabad
lawyers in Lucknow
lawyers in Jodhpur
Faridabad lawyers

lawyers in Mumbai
lawyers in Pune
lawyers in Nagpur
lawyers in Ahmedabad
lawyers in Surat
Ghaziabad lawyers

lawyers in Kolkata
lawyers in Janjgir
lawyers in Rajkot
lawyers in Indore
lawyers in Ludhiana
Gurgaon lawyers

TOP

India's Most Trusted Online law library
Legal Services India is Copyrighted under the Registrar of Copyright Act ( Govt of India) © 2000-2016
 ISBN No: 978-81-928510-1-3