: , ANTI-COMPETITIVE AGREE:lVJ:t~'t!

i,
th C . petition Act, 2002 relates to th .
Section 3 of e om ments The anti-competit ·ve e l>tob ·t.
• · agree
anti-competitive nts that· unduly benefit a Pers
1 ag •••.,,
· 11Jtt'

in:;1'•t.
• .,,~
the type~ of agreem:ompetition in any particular 0 or g,,"1,t,;
which rrughtare
agreements prohibited under Competition Act, 20 . 11lsi
harm
0
11
. 3(l) f the Competition Act, 2002, no entel"h .
As er section
P
° · t· - l-'l'ls
. . s or person or assoc,a ion of Person • o,
~iation of enterpn::n respect of production, supply, distr·t •han~1
mto any a~_emen controi"of goods .orblprovision
age acqms1bon, or d
of se~-Ulion,st,
ices 1
' or 1s 1 1 to cause an apprec1a e a verse effect
. J"k , Whi
causes eY · l t S • n col\,,
. wit
bon . h"In I n d"Ia. If any agreement 0
co
"d v10 a es ecbon 3(1) of th·is••1pe
pe t I~t.10n Act. , 2002, it would
. be vm .

Based on the provisions contained in ~ectio?s 3(3) anct ( )

anb-compe
. t·t·ve
11 3 4ag,,
agreements can be classified into horizontal
. 't
ments and vertical agreements.

8 _4_1 VERTICAL AGREEMENTS

Vertical agreements are the .~ypes o_f a?~eeffients th_at are fonn
among non-competing enterprises or 1nd1v1duals working at differe
stages or levels of production in i-espect of production, supply, dist
bution, storage, s11le or price of goods, etc. Such agreements amo
manufacturers and wholesalers can adversely affect competition ·
the market and are known as vertical anti-competitive agreement
Various types of vertical agreements as per Competition Act are
follows:

Tie-in arrangement: A tie-in arrangement means any agreeme

that requires a purchaser of goods to purchase some other goo
as a condition for such purchase. For such an arrangement, I ·•\'
purchaser of certain goods must purchase some goods along wit
the goods required by him/her as a precondition for effecting!
primary purchase. Such tie-in 'a greements are used by sellers 1
increase their sale and earn more profit. For example, a penc
manufacturer and seller agrees to sell penCils to a customer only
the customer purchases sharpellers also.

Exclusive a~eement: An exclusive agreement may be _of 1:

tYPes-excJusive supply agreement
agr~ement. . and exclusive diS!nbu~

Under excl · · · · • · ts th
h . us1ve supply agreement the supplier resin~ th
fii': t:ser o~he goods from acquiri~g or dealing in goods ~ere
into byo;e ollered by the supplier. Such agreements are en·na
PosI·t·Ion In
. se
thoer
- or• supplier be~.:::u,c-,,. L ' • . ..1",-,,1
 . ration amongst themselves as the 1'd
sales vo1ume et ea be·
control over the mark . ltl.g .
· tomer/products/territories or a11t1
Allocate t:u:r market-sharing: At times, two o~atket d.'
agreem;n into an agreement with one another ~ore bll./Vis1 •
.-
~aty enseorf customers they serve, the products tho share ~1:s
1n erm h ey p ••1a
the territories they serve. In _ot er word~, businesses rocill.1!1: t~ I
.
, .
their sales of goods and services to certa1? geographi;iay tes:. • •• ••-
•
Iea ds to the development of monopoly which is an ant·1-corn_
areas Ii
·
activity. \ · 1)1:tit\ •
8.4.3 CARTELS
A cartel refers to an associat~on of organisations that Work in th
industry and they collude with each other for preventing - e_ sa
NOW · · · compe t·t·
reducing or ehminabng · agre' re str1l!t'1n
1 10n. S uc h a co11us1ve
·ganisations . . . . . ernent ll\
gement are
be exphc1t or tacit in nature.
Businesses involved in a cartel take decisions or steps whi h
help them to dominate the market_ and control market pri~es~;~
collusive decisions lead tq the creation of a monopoly or a duopoly.
acq
Most cartels and collusive agreements ar~ illegal. When cartel the sup]
able ~o convert the perfectly competitive market into a man: a
or a duopoly, they gain control over all critical business areas ~: the follo~
as pricing and market contr_ol. Collusive agreements usually lead
anti-competitive practices such as price-fixing and market-sharin ixing
Such practices are aimed at reducing output and raising prices. agreem
Cartels may also indulge in making decisions that lead to misalloc ive dist
tion of resources. For instance, cartels may willfully create an artifici
shortage of goods or servi.ces demanded by customers.

Most cartels are illegal; however, export cartels in most countries

at international level are legal. For example, the .Organfaation oft
Petroleum Exporting Countries (OPEC) is a legal international cart

8.4.4 BID RIGGING

Bid rigging is an illegal practice or agreement created between diffe

t ent organisations or persons that are engaged in production of ide~
le
cal or similar products-or trading of services which leads to eliminat
IS or reducing competition for bids. It adversely affects or manipula:
st the bidding process. Under bid rigging different competing parb Ill
collude with each other and choose a wi~ner of the bidding.process
e th
making all competitors submit uncompetitive bids.
on~
Rigged bidding creates an illusion of real bidding even though _t to
!
result 0 bidding is already predetermined. Due to this manipU~~~~
competitors do nnt a,:i.t r... . . - L - - __ I' •• • •• _ JliP bl !-
C01
 ----~ 4vr ens .
CCl belleves Luo n access a range of goods all.t"ll)_ c:,D that
i, " ' " ' • • -,.- -
•

mon people of Ind1~ ca to regulate competition so nthd sel'vi~ t~l:l

P etitive prices:
. It aims r ·1·t
. centive fior ,ac1 . inno at.tL••• ~~<l.1,Q
• abng
can have max1mum H inlthy compe t·t· . "at10ll %N
I IOn in rnarkets I
t()<:I. Q
ll.~
. 1·
ing specia isa tion ea ·1 bl t
· d hoice ava1 a e . o consurnel" eaq s t t I'\~b
d . crease c I 1 1 . s. l'h 0 l:lq
costs an m ds roviding a eve p aying field to th •••ro, ,,
CCI works towar h p me time take care of the inte • llia,-l '• I
ticipanls and at t e sa . '••ts of 14'11
sumers as well. · ecQ
. b d through which the central gover
Th~ C~I isththe0 b ":ciives of the Competition Act, 2002.";:,•nt '""1,
acluevmg '.'
. t f Chairperson and not less thanItwo and not mo, e thean.Cc1
6 ca
sis s which
bers o a are appom
. . ted. by the. centra government. l'he lliafo, "1,a. oo.lll
. . of the CCI are as follows.
1hes . . . Ct1 ant
· having
· · AAEC . qUl
.
Eliminating practjces .
met
Promoting and sustaining competition
oW
Protecting the interests of consumers
rulE
Ensuring the freedom of trade in Indian markets
Undertaking competition adv.o cacy
0 Creating public awareness
0
Imparting training on competition issues to its staff, Within
outside country

8.5.1 COMPOSITION OF CCI

As per Section 8 of the Competition Act; 2002 as amended by the Co

teActare petition (Amendment) Act, 2007, the CCI comprises of a Chairper,
'edthrou9h and other m<imbers which may range from two to six in.number.
whichftas members of the CCI are appointed by the central government
the central they serve as full-time members. a1
11ctftom 14
"jur
The central government selects the members of the CCI based once to:
tain characteristics, which are:
tha·
a Members must be persons ofproved ability, integrity, and standin
a Members must possess certain special knowledge. Ac
st e
a ~•mbe~s mu have a Professional e~perience of at least 15 year5i st
international trade, economics, business commerce law, fmanc
account~ncy, ~anagement, industry, public. affairs, o~ competitio
matters, including compet' f
1
ion 1aw and policy.
a Each member, includin th Ch . ter
of 5 years and is 1. 'bl g e airperson is appointed for a
. e ig1 e for re-appointment.
a No inember can re . · f ge
lnain a inember after reaching 65 years o a
 . ·urisdictional rights_ on matters relate
exclus1v~
petitive issues
J 1·n the telecom mdustry.
. . <! to •~1··o, s
J
d Bull Machines are construction equipllle \, 1 11
2. tJCB an h as a dispute between JCB and h l"lt ll-tah t
urers · T ere. w"!suit agamst
. Bu11 M ach"mes for int
'°lllJ. "¼ch-
'k.. .,~f-
'<
1JCB filed at c1vlIproperty to restrict Bull Machines tifngellie~¾. iC
·ts intellec ua d" b toll-t ·4
th
ing !he mi~ k t This case was pen mg efore th l:i- "",
~;chines proceeded a?ainst Jen h:ro 1ruic.,/0
butthee groun d s that JCB had
0 a.:
ch
on . . denied
t. fmarket ac '•ss re the
I .1'
Machines by obtaining an !nJunctt1on JCroBm the l!igh 13~11 • Cl
k gnisance o_ f tlus ma er. lllov"d th '<l\i~
CCI too . cot the CCI as the institution of this inv lii · bi
Court
ld hagams d . t th C est1g .
wou ave ,;nter-alia translate
. h in oh the CJ Pre-dec·d·
. atio
I lllg f
outcome of the civil smt event oug e same is Pend· th.
Ing
1
posal before the High Court.
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73 _ • , , J

853
INQUIRY INTO CERTAIN AGREEMENT AND
·· DOMINANT POSITION OF ENTERPRISES

. The CCI has the power to inquire into any alleged violation of
· lions 3 and 4, i.e., anti-competitive agreements and abuse of do ·
position by
following taking suo moto cognisance (on its own motion) or111inI ,
cases:

When the CCI receives any information from any person, colIS!nn
or their association which is accompanied with the required!
amount

When the C::CI receives a reference made to it by the cen

government or state government or statutory authority

POWERS AND JURISDICTION OF THE DIRECTOR

8.5.4 GENERAL

According to Section 2 (g) of the Competition Act, 2002, 'Dire<:!

General' (DG) means the Director General that has been appoint
under Section 16 (l) of the Competition .Act 2002 and it includes
Additional,
under Joint, Deputy, or Assistant Dir~ctors General appoin
that section.

~ectionth16 of the ~ompetition Act, 2002 relates to the appointment

G ~f e CCI, 'l'his section states that the central government
~PP?int D? for assisting the CCI. The DG h I the CCI in condu111
Ing inquiry into the t . e ps Com
tition A.ct 2002 8 I co~ ravent1ons of any Provisions of the . t
Act· The '0 ,.uce
,., ofong th With
DG certain other functions as specifiedDepll 111
e also cornprises .Additional. Joint,