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CS Executive · Economic, Commercial and Intellectual Property Laws · Competition Law

Aarav Traders, Bharat Supplies and Chetan Enterprises are bidding for a municipal tender. They secretly agree that Aarav will quote the lowest price and the other two will submit higher cover bids. Which description under section 3 best fits this arrangement?

This is bid rigging, which is presumed to have an appreciable adverse effect on competition under section 3(3)(d). Competitors agreed to manipulate the bidding process through cover bids, which eliminates or reduces competition for the tender. It is not a vertical arrangement such as a tie-in or exclusive distribution.

  1. ABid rigging, presumed to have an appreciable adverse effect on competitionCorrect
  2. BAn exclusive distribution agreement requiring proof of appreciable adverse effect
  3. CA tie-in arrangement assessed under the rule of reason
  4. DA joint venture agreement that is exempt as it increases efficiency

Explanation

Section 3(3)(d) covers agreements that result in bid rigging or collusive bidding. Bid rigging means an agreement between enterprises in identical or similar trade that eliminates or reduces competition for bids or manipulates the bidding process. Cover bidding does exactly this, so the presumption applies. A tie-in concerns a condition to buy other distinct goods, which is absent here.

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