29 January 2014

Unwritten contract restraining competition is anti-competitive

Unwritten contract between the two opposite parties that it will not allow the competition of informant with one of the opposite parties has been, prima facie, held as anti-competitive by the Competition Commission of India (CCI).


Evidence of agreement

According to CCI, arrangement or understanding between the opposite parties about clients amounted to an agreement under the Competition Act. The Commission in this regard relied on e-mail correspondences of the informant with the opposite party, who had sold the printing machine to the informant, refusing to honor the AMC on some undisclosed grounds.

The CCI was of the view that the correspondence between informant and the opposite party made it prima facie clear that the opposite party had an agreement/understanding with the other opposite party that in case the informant competes with the latter for its existing clients, then the former opposite party shall not provide service of maintenance of the machine to the informant. Definition of ‘agreement’ under Section 2(b) of the Competition Act was also taken note of in this regard.


Abuse of dominant position

Further, noting that the specialized machine in question had patented technology, patent being held by the opposite party, it was held that the opposite party was the sole service provider and prima facie had monopoly over servicing market of the machine. The Commission, in its Order dated 12-12-2013, while directing the DG to investigate, hence held that there was prima facie violation of Section 4(2)(a)(i) of the Competition Act.


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