Part 2 - Introduction to Competition Law Flashcards
(12 cards)
Essential conditions to show anti-competitive tying
- Presence of two seperate products or services capable of being tied, and the condition that the purchase of a commodity is contingent on the purchase of another
- Seller must have sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product.
- Tying arrangement must affect a “not substantial” amount of commerce.
Apple Case
Types of Exclusivity Arrangements
- Exclusive supply agreement
- Exclusive distribution agreement
What is an exclusive supply agreement?
As per the act, any agreement restricting the purchaser from acquiring or otherwise dealing in any goods other than those of the seller.
What is an exclusive distribution agreement?
Any agreement to limit restrict or withhold the output or supply of any goods or allocate any area or market for the sale of the goods
How can exclusive supply be anticompetitive?
Anticompetitive foreclosuer of other buyers if the exclusive buyer has significant market power on the downstream market
How can exclusive distribution agreements be anti-competitive?
Intra-brand competition: Some stores could give discounts on the same brand, but here since all stores are of the same distributors, price is the same.
Market partitioning leading to price distribution: Region A distributor may charge higher prices than Region B distributor.
The market power of the supplier is taken into account to see if there’s AAEC. If there are other easily available alternatives to the supplied product, then np.
General criteria to be satisfied to establish refusal to deal
- Product to which access is sought is indispensable to someone wishing to compete in the downstream market.
- Refusal to grant access leads to the elimination of effective competition
- There is no objective justification for refusal to supply.
What is resale price maintenance? How/when is anticompetitive?
Setting a price floor (a minimum price) is seen as anti-competitive because it harms consumers by keeping prices higher than they might otherwise be in a competitive market.
Resale price maintenance includes any agreement to sell goods on the condition that the prices to be charged on resale shall be the prices stupulated by the seller unless clearly stated that prices lower than those may be charged.
Section 3 and IPR
What is the extent of IPR protection in the Competition Act?
Exemption of section 3 to any or all agreements restraining the infringement of or imposing reasonable conditions necessary for the protection of intellectual property rights.
Commission in FICCI Multiplex regarding IPR
Intellectual property laws do not have absolute overriding effect on competition law. The extent of the non-obstante clause is not absolute as is clear from the language.
What was the IPR issue in the Automobiles companies case
Automobile companies claimed that: Restrictions placed upon original equipment suppliers from undertaking sales of their proprietary parts to third parties without seeking prior consent falls within the ambit of reasonable condition to prevent infringement of their IPR.
What did the commission establish in the Automobiles case vis-a-vis IPR?
To determine whether an exemption under Section 3(5) is available or not, it is necessary to consider the following:
1. Whether the right which is put forward is correctly characterised as protecting an IP
2. Whether the requirements of the law granting the IPR are in fact being satisfied?
The commission in this case held that the exemption was not available as the OEMs had failed to submit relevant documentary evidence to establish the grant of the applicable spare parts IPRs in India. Also, they failed to show how it was a reasonable condition necessary for protection of their rights.
