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Part 3: Competition Compliance in India - competitors

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This is part 3 of a ten part series - that was authored by AnantLaw and published by Lexology on 30 April 2020. All laws stated in this series were accurate on 24 February 2020.


Part3: Dealing with competitors

Arrangements to avoid

Keeping Competition Law in mind, what types of arrangements should the company avoid entering into with its competitors?

The company should not generally enter into any conduct (agreement, arrangement, understanding or action in concert) that may fall under the purview of section 3(3) of the Competition Act (anticompetitive conduct among horizontal players) and is likely to have an appreciable adverse effect on competition in the market. These include agreements, arrangements, understanding or practice conducted regarding:

  • the direct or indirect fixing of purchase or sale prices (including the sharing of information of sensitive information exchanges, cartels, etc);

  • restrictions on outputs and the fixing of other trading conditions in the form of limiting or controlling production, supply, markets, technical development or investment;

  • market allocation or market sharing by geographical area, or type of goods or services or number of customers; and

  • collusive bidding (collusive tendering and bid rigging), tenders submitted that have the effect of eliminating competition for bids or manipulating the process of bidding (including bid conditions) or collective boycotts.

An agreement or understanding need not be a formal or written one; even a mere nod may be considered as an agreement between the parties.


Suggested precautions

What precautions can be taken to manage competition law risk when the company enters into an arrangement with a competitor?

In dealing with competitors, an enterprise should take into consideration the following guidance.

  • Do not exchange commercially sensitive information or data (especially those that are non-historic and not publicly available), including strategic information (proposed) that is capable of impacting  individual decisions of prices or quantities of goods or the provision of services of a company. Commercially sensitive information and data  includes:

    • Price data (including those of components);

    • Quantities (actual and proposed), capacity and utilisation;

    • Quality, marketing and other strategic plans (including investments, risks and technology)

    • Demand, customers, sales, turnover, profits and margins,

    • The terms of credit, sale, purchase or billing;

    • Discounts;

    • Delivery or payments terms, including transportation or distribution charges;

    • Commissions, rebates or incentives (optional or mandatory, exclusive or otherwise);

    • Salaries (maximum, minimum, at band levels, entry-level or otherwise); and

    • Any other business sensitive information that disallows companies to act autonomously or independently and instead allows them to tailor their critical business decisions based on such commercially sensitive information or data received from competitors).

  • Do not share markets or customers. These arrangements include the commencement or continuation of supply in a particular geographical area; the withdrawal of supply to such area; and the extent to which the enterprise intends to bid for business from, or make offers to, specific customers or classes of customers, or customers located in particular geographic areas.

  • Do not share confidential documents.

  • Do not exchange information indirectly through agents or by forming hub-and-spoke cartels.

  • Do not use the trade association as a forum or vehicle or platform for coordinating or exchanging commercially sensitive information.

  • Do not meet competitors between the release of tender and the submission of bids.

  • Do not engage common agents to deposit bids.

  • Do not share confidential documents.

When planning to enter into a combination or collaboration with a competitor (in any form) that necessitates it, the exchange of commercially sensitive information (if deemed critical) may be undertaken by creating ‘clean teams’, of members who are not involved in the day-to-day operations of competing companies.   

It is advisable to contact an internal or external legal team or seek legal advice when entering into or contemplating any agreement (including but not limited to a research and development agreement, production or purchasing agreement, standardisation agreement and agreements on commercialisation) with a competitor or even with a non-competitor.

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