Competition Law Case Study

Agreement and Competitive Threat under Competition Law.

1 Introduction

The principal objective of competition law is to make market economy work better by stopping private power from obstructing markets. Thus competition law aims at protecting competitive process which in turn promotes efficiency, increases consumer welfare, and contributes to the promotion of economy as a whole. On the other hand companies conclude agreements every day but not all agreements are threat under the Competition law. In this paper I analyze the broadly agreements possible in the context and how they can be competitive threat under the Competition law.

2 Anti-Competitive Agreements:

Agreements that restrict competition fall into two categories 1 ‘horizontal

Scientific, and economic development by means of production or distribution of goods or provision of services. The factors a, b and c relate to negative effects on competition whereas the factors d, e and f relate to beneficial effects. In the case of Tata Engineering observed that to determine whether the restrain promoted or suppressed competition, it was necessary to consider three matters: first, what facts are peculiar to the business to which the restraint is applied. Second, what was the condition before and after the restraint was imposed. Third, what is the nature of restraint and what is its actual and probable effect. Agreements under section 3(4) are subjected to test of this rule of reason. The Act does not specify the horizontal and vertical agreements however sec 33 applies for horizontal agreements whereas sec 3(4) for verticals. Sec 3(3) covers cartels which is again defined broadly in sec 2(c). It states that a cartel includes an association of producers, sellers, distributors, traders or service providers, who, by agreement amongst themselves, limit, control, or attempt to control the production , distribution, sale or price of , or trade in goods or provision of services.’ There may be horizontal agreements for activities other than those mentioned in Sec 3(3) and such agreements would be covered by sec 3(1), and would therefore be subject to the rule of