Anti-competitive agreements in India are common, and their definition is not that difficult to ascertain. For the purpose of this article, the focus will be on a couple of specific agreements, which fall into the more specific realm of anti-competitive clauses. The definition is not as-simple as it may seem.
Anti-competitive agreements can be exclusive, or they can be restrictive, meaning that they prevent certain service providers from doing business with other providers. They can also prevent service providers from engaging in certain activities. It is important for service providers and companies to understand these kinds of clauses because, if they are allowed to proliferate and become the norm, it can seriously harm competition and inhibit investment and innovation.
Exclusive arrangements can cover a number of situations. Some could involve blocking access to content, websites, or services. Others can limit access to network infrastructure, or the transfer of assets. Still others could simply be used to limit or prohibit the distribution of information about specific offerings. One of the more common types of anti-competitive agreements, however, involves the granting of monopolistic power.
Monopoly is sometimes referred to as a “power of market” agreement. In this scenario, the participants are actually related, as are their customers. They have exclusive access to and control over the relevant market. This kind of arrangement has often been used in telecommunication firms, where a company controls the distribution of signals and the level of consumer penetration. It is sometimes used, as well, to restrict entry into markets, and create monopoly protection for the seller.
Restrictive covenants are another form of anti-competitive provisions. These agreements are used to limit the ability of another party to make use of a particular service. In this instance, the other party is not allowed to enter into a direct sale, a sale within the scope of a specified geographic area, or the provision of a specific amount of services. Some jurisdictions have applied rules of general competition law to this type of agreement.
There are a variety of other uses for competitive agreements. They may be used to limit the ability of a seller to make use of a designated provider for a specific service, or to restrict the amount of services a seller can provide within a specified geographic area. They may also restrict the amount of advertising that a provider may engage in, or restrict the extent of time that a provider may advertise its services. Sometimes, a restrictive covenant will require a provider to enter into a franchise agreement with a buyer that limits the provider's ability to engage in some kinds of business. They can also restrict the provider's ability to enter into certain types of service contracts.
