Skip to content

CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Corporate and Economic Laws

Case: Prakash Steels Ltd's total sales in India's relevant steel market are Rs 600 crore. It has a rival, Mehta Alloys Ltd. The two firms jointly decide at a meeting to fix a common minimum selling price and to cut output by 15% in order to support prices. A distributor complains to the Competition Commission of India. Under the Competition Act, 2002, how is this agreement treated?

The agreement is presumed to have an appreciable adverse effect on competition. Competitors agreeing to fix prices and limit output is a horizontal agreement covered by the statutory presumption in Section 3(3) of the Competition Act. The burden lies on the parties to rebut it; market share below 50% gives no exemption.

  1. AIt is presumed to have an appreciable adverse effect on competition because it is a horizontal agreement of price fixing and output limitationCorrect
  2. BIt is valid unless the CCI proves actual loss to consumers
  3. CIt is exempt as the market share of each is below 50%
  4. DIt is valid if the firms file the agreement with the Registrar of Companies

Explanation

Horizontal agreements between competitors that directly or indirectly determine prices or limit production or supply are presumed to cause an appreciable adverse effect on competition (Section 3(3)). The presumption is rebuttable, but the burden is on the parties. Market share thresholds belong to dominance analysis and do not exempt cartels.

Did you get it right without looking?

One question tells you little. A timed set on Corporate and Economic Laws shows your real accuracy, how long you take and where you lose marks.

Practise Corporate and Economic LawsFree diagnostic mock

More Corporate and Economic Laws questions