OECD kpcdb

1. Scope

 

Section 3 (1) of the Act sets forth that no enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition (AAEC) within India.

 

Section 3 (3) of the Competition Act prohibits horizontal anti-competitive agreements, 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,

shall be presumed to have an AAEC.

 

Export cartels are excluded from this prohibition. 

 

Regarding vertical agreements, including—

 

a)  tie-in arrangement;

b)  exclusive supply agreement;

c)  exclusive distribution agreement;

d)  refusal to deal;

e)  resale price maintenance,

 

shall be an agreement in contravention of Section 3 (1) if such agreement causes or is likely to cause an AAEC in India. Unlike for horizontal agreements of Section 3(3) there is thus a rule of reason approach to vertical agreements.

2. Assessment

Section 19 (3) of the Act stipulates that the CCI shall, while determining whether an agreement has an AAEC under section 3, have due regard to all or any of the following factors, namely:—

 

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.

3. Remedies and sanctions

Under Section 27, where the CCI identifies an agreement which contravenes Section 3, it may impose upon the enterprises to discontinue and not re-enter such an agreement, or a penalty of up to 10% of the average of the turnover for the last three preceding financial years, or the highest between up to three times the profit of the enterprise for each year of the continuance of the agreement or up to 10% of the turnover for each year of the continuance of the agreement, for each of the involved enterprises.

4. Leniency

An enterprise which is a part of a cartel, may benefit from the leniency programme governed by Section 46 of the and the CCI (Lesser Penalty) Regulations, 2009.

The CCI also has a marker system. More than 3 parties to the same infringement can benefit from leniency.

The first applicant may see a reduction of its penalty, up to one hundred percent, if it provides a vital disclosure which enables the CCI to form a prima-facie opinion on the existence of a cartel, or establishes the contravention in an investigation. Subsequent applicants may also benefit from leniency. The second applicant may benefit from a reduction of up to fifty percent of the full penalty, while third or subsequent applicants may be granted reductions of up to thirty percent of the full penalty.

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).