Anti Competitive Agreements Under Competition Act 2002

Section 3 (1) of the Act provides for a general prohibition on entering into agreements that could be the origin of an AAEC in India: Facts- The informant in the case had claimed anti-competitive practices on the part of the counterparty that the original spare parts of automobiles manufactured by certain OPs were not freely available on the open market and that most OEMs (equipment manufacturers) and licensed dealers had clauses in their agreements that require dealers allowed to purchase spare parts only from OEMs and their licensed suppliers. The concept of pricing the resale was examined by the Commission in the case of Fx Enterprise Solutions India Pvt. Ltd. against Hyundai Motor India Limited4. In this case, the informant had stated that, pursuant to the hyundai agreement, the dealers had been instructed to procure all components and accessories of the automobile only from Hyundai or its suppliers. While working on Hyundai`s allegedly anti-competitive practices, the informant explained that Hyundai had imposed a «discount control mechanism» in which merchants could only grant a maximum rebate and where merchants were also not entitled to grant discounts beyond a recommended area, which would amount to «resale price retention» in violation of Section 3 (4)e) of the Act. In light of the facts and circumstances of the case, the ICC found that the section 3, paragraph 5 exemption from the Act was not available to OEMs (leading equipment manufacturers) who had not provided the relevant documentation proving the granting of applicable intellectual property rights in India with respect to the various spare parts. ICC Decision — The Commission found that such agreements were in the nature of exclusive delivery, exclusive distribution agreements and refusal to act under Section 3 (4) of the Act, and the Commission therefore had to determine whether such agreements would have an AAEC in India. The question here is what would be described as anti-competitive. Section 3, paragraph 2, of the Act states that the main determinant of an anti-competitive agreement is its AAEC within India.

It is essential that Article 32 of the Act provides that even if an agreement had been reached outside India, the ICC would be entitled to request such an agreement if such an agreement had an AAEC in India. Shamsher Kataria`s case has looked in depth at the determination of the IPR exemption under Section 3(5) of the Act. In the event that the POs sought exemption from intellectual property rights under Section 3(5) of the Act and stated that the restrictions imposed on OES (first OEMs) to sell their own parts without prior authorization would fall within reasonable conditions to prevent violations of their intellectual property rights. The Commission noted that consideration should be given to the possibility or not of an exemption under Article 3, paragraph 5 of the Act: it should also be noted that Section 2, point b), the law provides that any agreement or agreement or act has the effect of an agreement, agreement or act in consultation — (i) whether it is such an agreement , such an understanding or act, either formal or written; or (ii) whether such an agreement, understanding or act is to be enforceable through judicial proceedings.