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Anti Competitive Agreements


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Anti Competitive Agreements

The Competition Act declares any agreement under this Act to include any understanding, agreement or concerted action which has been conducted between parties and may not be formally written. Any anti-competitive agreement is naturally therefore an agreement that has a negative effect on any competition and may include the following:

  • Price fixing agreements
  • Collusive bidding
  • Conditional buying or selling of goods
  • Agreement for allocating markets
  • Agreement for limiting production and supply
  • Any exclusive distribution arrangement
  • Maintaining resale prices
  • Agreement for refusing to enter into deals

According to this enactment, any agreement which is concluded by any individual or association of individuals for controlling goods, production and supply of goods, storage and distribution or acquisition of goods that is capable of causing an adverse impact on competition, is to be held as null and void.

The Inquiry Procedure:

The CCI is empowered to initiate an enquiry into such agreements or an abuse of dominance:

  • Independently based on data it has
  • Based on complaints from an individual
  • Based on reference by a statutory authority or the state or Central Government

Every individual, consumer association and trade association has the power to make complaints against such abuse of dominance and anti-competitive agreements. This individual could belong to a HUF or Hindu Undivided Family, company, firm, body of individuals, association of persons, statutory authority, local authority etc. The consumer is any individual who buys wither for his personal use or for other reasons.

Steps in the process of inquiry:

The CCI is authorized to start an enquiry based on the information it has. When it feels that no case exists, it can pass orders to close the case. However, when the CCI believes that a prima facie case does exist on the basis of complaints it receives, it can direct the DG to investigate and submit his report thereafter.

  • The CCI, on receiving the Director General's report, proceeds to adjudicate on the issue.
  • It hears both parties and then passes orders which it feels are suited for the case.
  • The DG reviews all objections raised by the parties and once satisfied that no contraventions have taken place, sends a report to that effect and closes the case.
  • When the DG reports a contravention of the Act's provisions after reviewing objections that he has received, an investigation is ordered.

Orders that the Competition Commission of India can enforce:

  • It can order the parties to terminate the agreement in question and refrain from entering into similar agreements.
  • Impose fines not greater than 10% of the violator's average turnover during the previous three financial years.
  • Order each party of the cartel to pay a penalty amounting to thrice the total profits incurred during the years this agreement was operational. Alternatively, the offender has to pay 10% of its turnover for every year that this agreement was valid.
  • Order the modification of the terms of the agreement.
  • Authorized to pass ex-parte orders.

CCI orders where abuse of dominance is concerned:

  • Order enterprises to stop abusive activities.
  • Impose fines on the offender to pay up not more than 10% of its turnover during the last three years.
  • Order the dominant enterprise to be divided and order for the transfer of rights, liabilities, property, contract modification, creation and surrender of securities, or winding up an enterprise.
  • It can also order suitable ex-parte interim orders.

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