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CS Professional · Corporate Restructuring, Valuation and Insolvency · Regulation of Combinations

Kaveri Appliances supplies refrigerators to a dealer on the condition that the dealer must also buy a distinct range of water purifiers from Kaveri. How is this arrangement treated under section 3 of the Competition Act, 2002?

This is a tie-in arrangement under section 3(4). Unlike horizontal cartel agreements, it is not presumed anti-competitive. It contravenes section 3(1) only if it causes or is likely to cause an appreciable adverse effect on competition in India, which must be established.

  1. AIt is presumed to have an appreciable adverse effect on competition under section 3(3)
  2. BIt is a tie-in arrangement under section 3(4), which contravenes section 3(1) only if it causes or is likely to cause an appreciable adverse effect on competition in IndiaCorrect
  3. CIt is void automatically, with no need to examine its effect on competition
  4. DIt is outside section 3 because the parties are at different levels of the production chain

Explanation

A tie-in includes any agreement requiring a purchaser, as a condition of purchase, to buy other distinct goods or services. Section 3(4) agreements are not presumed anti-competitive; they contravene section 3(1) only if an appreciable adverse effect on competition in India is shown or likely. Option D is wrong because section 3(4) expressly addresses agreements at different stages of the production chain.

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