By- Abhinav Maurya


Section 3 of the Competition Act 2002 explains prohibitions on any agreements which may have a detrimental effect on competition within India.

These agreements include any agreement related to production, supply, distribution, storage, acquisition or control of goods or provisions of services between enterprise or association of enterprises or person or association of persons.

These association or association of persons include cartels do business that may be similar. The literal meaning of cartel is an association of manufacturers or suppliers to maintain prices at a high-level and restricting competition.

The trade or provision of services carried out by above association directly or indirectly regulate the purchase or sale prices, sets limits or decide how much the production and supply will be done which eventually gives them the full control of markets, technical development, investment or provisions of services.

These associations share the market or source of production by way of distributing a geographical area of the market, or type of goods or services which leads to distribution among customers in the market. This way of trade directly or indirectly paves the path for bid-rigging or collusive rigging which means enterprises or persons engaged in trade or production have a way of reducing or removing competition leading to exploitation of the bidding process. This kind of trading effects competition adversely.

Agreements at Different stages

The agreements at different stages or levels of the production chain in different markets that may be related to production, supply, distribution, storage, sale or price of, or trade-in goods or provision of services that includes:

(A) tie-in arrangement – an agreement to fulfil a condition to complete the first agreement. Let say if anyone purchases something, he has to buy something in additions, this additional purchase is the fulfilment of the condition to complete the purchase.

(B) exclusive supply arrangement – an agreement that put a restriction on the purchaser by the supplier that he will not purchase the goods from any other seller except the supplier in course of his trade.

(C) exclusive distribution agreement – an agreement that set a limit and bound the supply or output of any goods. And set a fixed area for sale or distribution of such goods.

(D) refusal to deal – an agreement which restricts or refuses a certain class of persons to do trade. This agreement determines to whom the goods are sold or from who to be bought.

(E) resale prices maintenance – an agreement that bounds the purchaser of goods that on the resale of these goods he/she will sell at the price fixed by the seller unless it is notified that prices lower than those prices may be charged.

So, if any agreement entered that is mentioned above which may put strain or affect adversely on healthy competition is void or not legally binding.


IPR Exception

The right of any person to restrict anyone from undermining his work or to impose reasonable conditions as may be necessary for protecting his right that he has been given under following Acts which are not taken away under this Section 3 of Competition Act, 2002 –

(A) The Copyright Act, 1957 (Section 14)

(B) The Patents Act, 1970 (Section 39)

(C) The Trade and Merchandise Marks Act, 1958 (Section 43) or The Trade Marks Act, 1999 (Section 47)

(D) The Geographical Indications of Goods (Registration and Protection) Act, 1999 (Section 48)

(E) The Designs Act, 2000(Section 16)

(F) The Semi-Conductor Integrated Circuits Layout-Designs Act, 2000 (Section 37).

Section 3 of Competition Act, 2002 also does not restrict anyone’s right to export goods from India to the extent to which the agreement related exclusively to the production, supply, distribution or control of goods or provision of services for such exports

The sole purpose of Anti-Competition is to provide and maintain developing and healthy competitions in India.

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