Reprimanding ‘Anti-Competitive Agreements’ by the CCI

  • Vartika Gaur and Sanyam Juneja
  • Show Author Details
  • Vartika Gaur

    Student at Guru Gobind Singh Indraprastha University, India

  • Sanyam Juneja

    Student at Guru Gobind Singh Indraprastha University, India

Abstract

The arrangements which are against serious in nature or may cause or liable to cause obvious unfriendly consequences for the market are restricted in an Indian Competition system under section 3 of the Competition Act, 2002 by the opposition authority for example The Competition Commission of India. In the event that any producer, seller, distributor, trader or service provider has contradicted the arrangements of section 3 of the Act or have been enjoyed the cartels progressing in the market whether going into such arrangements on a level plane or vertically would be held at risk by the CCI for such a conduct. Besides the commission has presented a route forward methodology of mercy instrument under area 46 of the Act to distinguish the cartels of mysterious in nature and furthermore to profit the gatherings for conceding the decrease in punishment which is to be forced by the commission for such a direct.

Type

Research Paper

Information

International Journal of Law Management and Humanities, Volume 4, Issue 2, Page 281 - 289

DOI: http://doi.one/10.1732/IJLMH.26052

Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution -NonCommercial 4.0 International (CC BY-NC 4.0) (https://creativecommons.org/licenses/by-nc/4.0/), which permits remixing, adapting, and building upon the work for non-commercial use, provided the original work is properly cited.

Copyright

Copyright © IJLMH 2021

I. Introduction

In The Competition Act, 2002 articles at cultivating the fair rivalry and ensuring the lead of practices which are hostile to serious in nature in the Indian market. The arrangements which builds a deterrent in the move of the contenders or major parts in the market are supposed to be Anti-Competitive arrangements as revered under Section 3 of the Act. Under the Competition Act, 2002 the gatherings are taboo for the conduct which are Anti-Competitive in nature and would be considered lawfully mindful by the Competition Commission of India (CCI) which is a market administrative body for forestalling and directing such lead which comprises an enemy of serious practices in an India. For the most part, the arrangements which causes an apparent antagonistic impacts on the opposition (AAEC) are classified as hostile to serious arrangements under the arrangements referenced in the Act. To give the reasonable and only rivalry on the lookout, the fundamental goal and point of the Competition Act, 2002 is to forbid the lead of such practices which are hostile to serious in nature.

[1]Disallowance of specific arrangements contained under segment 3(1) of the Act:

Any undertaking or relationship of ventures or individual or any relationship of people who goes into the arrangements which controls the creation, dissemination, procurement and supply of the merchandise and enterprises which causes or is probably going to cause a calculable unfriendly impact on the opposition in the Indian market are carefully denied under the Competition Act, 2002.

[2]Likewise, any understanding negating the arrangements referenced under segment 3(1) of the Act are supposed to be void in nature.

  • [3]Extra Territorial Reach

The exercises or practices which are against serious in nature (counting cartels) occurring outside the region of India and affecting the opposition in India, at that point in such a situation the Competition Commission of India may ask into such practices under segment 32 of the Act. Fundamentally, induldgement of any practices by the contenders or players occurring outside India yet making an impediment on the opposition in the Indian market would be held at risk by the Competition Commission of India under the arrangements referenced in the Act. The arrangements of area 32 of the Act gives the capacity to the Competition Commission of India to enquire and pass sufficient orders into such practices which are occurring outside the India yet causing or is probably going to cause an obvious antagonistic impacts on the opposition in the India.

In the event that any endeavor or gathering of undertakings or individual or relationship of people go into the arrangements which are outside the ward of India that controls the creation, supply, dispersion, stockpiling and securing of merchandise and ventures, causing an obvious unfriendly impacts on the opposition in India, at that point the Competition Commission of India (CCI) may make moves against such substances under area 32 of the Act. The arrangement of the part referenced under this Act is novel in nature as it gives the direct of practices which are occurring past the locale of India and causing an AAEC in an Indian market.

  • Recent Amendment

The Government of India in October 2018 organized the Competition Law Review Committee (CLRC) to make certain varieties in the Competition Act, 2002 and the report was presented by the council to the Indian Government on August 14, 2019.

In the wake of remembering all the progressions and proposals made by the advisory group in the report submitted to the public authority, the Ministry of Corporate Affairs (MCA) presented a draft Competition (Amendment) Bill, 2020 to renovate the Competition Act, 2002.

Certain progressions which have been settled on regarding hostile to serious arrangements under the draft are as per the following:

  • Buyer cartels are currently be unequivocally covered

Past to the correction in the Competition Act, 2002, the enactment of the Act zeroed in just on the “Vender Oriented Cartels” for example the purchaser cartels were not enveloped in the arrangements of the Act. In any case, after the alterations made in the Competition (Amendment) Bill, 2020, the Competition Commission of India has disregarded the part on the purchasers’ side considering them that they can likewise have an induldgement in the cartels which may cause a calculable unfriendly consequences for the opposition.

Hence subsequent to spellbinding all the suggestions into the thought the Competition (Amendment) Bill, 2020 has connected with the purchaser cartels into the image too.

  • Protection to the Intellectual Property Rights( IPR) holder

In path with the praises of the CLRC, the Competition (Amendment) Bill, 2020 has shielded the privileges of the IPR proprietors. The arrangements of segment 3(5) of the Competition Act, 2002 will be absolved for the IPR holders for example on the off chance that there is any infringement done by the people who have accomplished the Intellectual Property Rights (IPR holder) regarding rivalry law arrangements then that would be excluded and not be material in the circumstances by and large. Moreover, it has been stretched out to the arrangements of segment 4 of the Act.

  • Covering all arrangements building up among the endeavors

The part 3(4) of the Competition Act, 2002 which was prior utilitarian just to the arrangements which were vertical in nature, will currently be applied to the all non-even arrangements too. The suggestion of the CLRC in endeavor so places that the extent of segment 3(1) which covers the both even just as vertical arrangements once in the past will currently have been extended to cover such an arrangements occurring among the undertakings or gathering of ventures or people or gathering of people.

Moreover to expound the idea of hostile to serious arrangements under the Competition Law, these are grouped into the two general classes which are referenced underneath:

  • [4]Horizontal Agreements

Agreement between undertakings at the same level of distribution chain engaged in the trade of identical or similar goods or provisions of services that chiefly exist amongst competitors are connoted as horizontal agreements.

Such agreements are presumed to be anti-competitive which is referred to as the ‘per se rule’ thereby indicating that the agreements, acts or, any practices which are specified by The Competition Act, 2002 as deemed or presumed to have an appreciable adverse effect on competition are by themselves void.

There are numerous ways by which the undertakings in the marketplace indulge in an unfair manner of conducting business thereby adversely affecting the fair competition in the market. Therefore, to understand the concept of horizontal anti-competitive agreements it is appropriate to throw light on various ways by which associations may involve in such anti-competitive practices.

Cartel

A cartel comes into force when two or more enterprises or persons dealing in similar nature of goods or provision of services enter in an agreement whether implied or explicit prohibiting competition amongst them which may be in respect of price, product i.e., goods and provision of services and consumers. It severely affects the fair competition in the market, the growth of the economy of the country and the interest of the consumers.

Price fixing

An agreement where the undertakings in the market informally determine and fix the price for a good or provision of service either directly or indirectly to reduce or eliminate competition. Such agreements give the power in the hands of the market undertakings to determine and govern the price of the commodities rather than the price being determined by the free market forces. Such agreement results in a rise in the price of the goods or services above the price which would be considered as fair in the normal course accompanied by a significant fall in the quality of the goods and services thereby benefitting the members of the cartels and lending consumers in such a position where they are left with very fewer choices. Further resulting in an adverse impact on the fair competition and the economy of the country.

Market sharing

Market sharing is another familiar branch of horizontal agreements between the competitors in the market wherein the rivals mutually consent to fix for each market player an unequivocal region, gathering of clients or classification of goods and commonly choose and consent to bargain inside the space of their distributed section as it were. Such agreements bring about the formation of a monopoly of the market players in their designated portion and are along these lines void.

Bid rigging

The bidders engaged in trading of similar goods and provisions of services collude and fix the bid amount at a price pre-decided by them where the main objective is directed towards the elimination or reduction in the competition for bids or to affect adversely the bidding process. Bid rigging as a practice can occur through various means which may include an agreement to submit identical bids or not to bid against each other or to squeeze out outsider bidders etc.

  • [5]Vertical Agreements

Agreements between undertakings that are at different levels of the manufacturing or distribution process and therefore trading in different goods and provision of services are referred to as vertical agreements. Vertical anti-competitive practices include tie-in-arrangements, exclusive supply agreements, exclusive distribution agreements, refusal to deal and resale price maintenance and are likely to cause an adverse effect on competition in India.

The aforesaid agreements are not void per se but by the rule of reason i.e., the burden of proof is on the complainant to establish how an agreement is anti-competitive.

There are different kinds of vertical agreements which include:

Tie in arrangements

Where a condition is imposed on the purchaser of goods to purchase some other good/ product along with it is referred to as tie-in arrangements. The seller agrees to sell the ‘tying item’ only on one condition that the purchaser has to purchase the second product i.e., ‘tied product’ as well.  For example, an organization may force a customer to purchase a gas stove from them while giving a gas connection, under such circumstances, such agreements do not only eliminate competition in the market but also curb the buyer’s resistance to the tied product.

Exclusive supply agreements

An exclusive supply agreement restricts the purchaser from purchasing goods or acquiring services from any other undertaking in the market other than the seller or any other person who he may nominate on his behalf.

Exclusive distribution agreement

The exclusive distribution agreement includes any agreement which aims to limit, restrict or withhold the output or supply of any good or allocation of any area or market for disposal or sale of the goods.

Under such agreements, the supplier or the manufacturer consents to supply certain commodities to one specific party for resale purposes thus making it the sole distributor of that good in that specific geographical area.

Refusal to deal

Refusal to deal includes any agreement which imposes restriction or is likely to impose any restriction, by any way on the person to whom any goods are sold or from whom goods are to be bought. The intention is to restrict competition by buying or selling to or from a specific party only.

Resale price maintenance

An agreement where the goods are sold on a condition that the prices to be charged by the purchaser on the resale shall be the prices that have been stipulated by the seller himself unless it has been clearly stated that a price lower than that price can be charged.

Under this agreement price restraints are levied on the buyer with regards to the price that he may charge for the goods thereby resulting in an adverse effect on fair competition in the market.

II. Penalty by the cci for such a demeanor

 The Act takes a more genuine perspective on cartel wrongdoing and the stipulation to engage the CCI to force a higher punishment, and that too for every time of the duration of the cartel arrangement. The fine forced on each gathering by the CCI may reach out to10% of its turnover for every time of duration of such arrangement or three times its benefit for every one of such years, whichever is higher.

III. [6]Leniency regime- an operative apparatus to perceive the cartels

The tolerance strategy/system under the Indian lawful  structure is cherished according to Section 46 of the Competition Act, 2002 which states that if any producer, seller, distributor, trader or service provider has negated the arrangements of Section 3 of the Act or have been enjoyed the cartels progressing on the lookout, at that point they may move toward the Commission for the utilization of lesser punishment guidelines by unveiling and outfitting the important realities and confirmations which the Commission trusts it to be valid. The gatherings moving toward the Commission with the valid and fundamental divulgence of realities and confirmations would be qualified for the lesser punishment which is to be forced by the Commission and such decrease in the punishment is on first come, first served premise and which is for the most extreme initial three gatherings yet it has been further changed which peruses as referenced underneath.

Notwithstanding, Section 46 of the Act expresses that no application for tolerance can be made once the Director General (DG) has presented the report to the Competition Commission of India.

The tolerance program has been in activity since the implementation of the Competition Act, 2002 in May 2009. Be that as it may, the Competition Commission of India has presented first change on 22 August 2017 with respect to the lesser punishment guidelines which has permitted the people who are essential for the cartels to approach for the mercy application before the Commission and this alteration has annulled the impediment of candidates applying for lesser punishment prior to the Commission and has likewise given the marker status to people also.

  • Marker status for the primary candidate

Any individual or endeavour moving toward the Competition Commission of India basically who have been enjoyed the arrangements including (cartels), who reveals the pertinent realities and confirmations before the Commission, at that point after analyzing such realities and divulgences made by the primary member, the Commission may give the undeniable or up to 100% decrease in the punishment in the event that the Commission trusts it to be valid and applicable.

  • Marker status for the secondary candidate

Any individual or undertaking who moves toward the Commission with the applicable realities and outfits the data with respect to the lead of cartels before the Commission and on the off chance that the Commission considers it to be fit, may concede up to half decrease in the punishment.

  • Marker status for the third candidate

Any individual or undertaking moving toward the Commission with important realities what’s more, confirmations which the Commission trusts it to be fit, at that point in the wake of analysing such realities unveiled by the candidate, the Commission may give 30% decrease in the punishment.

  • No restriction on the ensuing candidates

Prior to this correction, the Competition Commission of India has limited and restricted the quantity of candidates applying for lesser punishment which was implied for the initial three candidates as it were. Yet, after this change as advised by the Commission in August 2017, there is no bar on the quantity of candidates applying for the tolerance program and would be qualified for the waiver up to 30% decrease in the punishment which is to be forced by the Commission.

According to the Competition Commission of India (Lesser Penalty Regulations), the candidate needs to connect with the Designated Authority for Lesser Penalty matters for example Secretary, Competition Commission of India. The candidate needs to contact through phone and followed by email/FAX or through composed correspondence. From that point onward, inside fifteen days of his first contact/ correspondence the candidate needs to give a point by point application uncovering all the important data in the lead of cartels. Up till now, this time breaking point of fifteen days was carefully clung to.

In the new occasions, a revision has been made to the Lesser Penalty Guidelines wherein party gets fifteen days of time from the date of receipt of his need/marker status. Thus, this new alteration gives some extra time to the candidate. The candidate needs to carefully present the nitty gritty data inside fifteen days bombing which the candidate will lose its marker status.

The arrangement of mercy application as cherished under Section 46 of the Act has helped and is a route forward methodology by the Competition Commission of India to identify the cartels all the more viably which are continuous on the lookout. As the Commission has founded the arrangement of mercy application (lesser punishment guidelines) under the Act, it has been an advantageous advance for the candidates since punishments which are likely to be forced by the Commission on the candidates for the lead of cartels would be weighty, however under Section 46 of the Act, the Commission has the arrangement to allow decrease in the punishments to the candidates who outfits and reveals the valid and significant data before the Commission.

IV. Conclusion

The competition regime in India prohibits anti-competitive agreements having an appreciable adverse effect on the competition in the market as enshrined under Section 3 of the Act. Any organization in the market which involves in any practice which is anti-competitive in nature will be held legally liable by the Competition Commission of India which is an administrative body liable for the advancement of competition all through and aim at carving out anti-competitive practices. Anti-competitive agreements are of two kinds i.e., horizontal and vertical agreements which have been talked about above in detail.

The Act provides the parties included in any cartel which is affirmed to have abused Section 3 of the Act, they may advance toward the Commission for the usage of lesser punishment guidelines by furnishing the significant factors and affirmations which the Commission confides in it to be substantial and valid. The recent revision that has been made to the lesser punishment guidelines wherein the party gets a time gap of fifteen days from the date of the receipt of his marker status thereby giving the party extra time to make full disclosure of all the vital information. This arrangement as enshrined in the Act is of huge significance and ends up being a path forward for the parties to reduce the punishment for indulging in cartels by unveiling all the fundamental data before the commission. This will empower the Commission to look out for cartels more viably which are on the lookout.

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FOOTNOTES

[1] The Competition Act, 2002 (Act of 2002), s. 3(1)

[2] The Competition Act, 2002 (Act of 2002), s. 3(2)

[3] The Competition Act, 2002 (Act of 2002), s. 32

[4] The Competition Act, 2002 (Act of 2002), s. 3(3)

[5] The Competition Act, 2002 (Act of 2002), s. 3(4)

[6] The Competition Act, 2002 (Act of 2002), s. 46