Competition Act, 2002 :
The Competition Act, 2002 prohibits an enterprise or association of enterprises or person or association of persons from entering into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which cause or is likely to cause an appreciable adverse effect on competition within India. Section 3(2) declares such anti competitive agreement to be void. Thus the Act reduces the whole agreement as ‘void’ if it contains anti-competitive clauses having appreciable adverse effect on competition. The Act also specifies conditions, the presence of which shall be presumed to have an appreciable adverse effect on competition.
Section 3(3) provides that following kinds of agreement between any person or enterprise or association of enterprises or practice carried on, or decision taken by them, including “cartels”, in relation to identical or similar trade of goods or services, to be presumed as having appreciable adverse effect on competition which –
(a) directly or indirectly determines purchase or sale prices;
(b) limits or controls production, supply, markets, technical development, investment or provision of services;
(c) shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way; and
(d) directly or indirectly results in bid rigging or collusive bidding.
It has been clarified that any agreement entered into by way of joint ventures shall not be prohibited by Section 3(1) if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provisions of services.
In terms of Section 3(4) of the Act, any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including – tie-in agreement; exclusive supply agreement; exclusive distribution agreement; refusal to deal; resale price maintenance; shall be treated as an agreement in contravention of section 3(1) if such agreement causes or is likely to cause an appreciable adverse effect on competition in India.
In any case, Section 3 of the Competition Act, 2002 does not restrict the right of any person to restrain any infringement of or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may be conferred upon him under various IPR statutes as recognized under the Competition Act, 2002 viz. the Copyright Act, 1957; the Patents Act, 1970; the Trade and Merchandise Marks Act, 1958 or the Trade Marks Act, 1999; the Geographical Indications of Goods (Registration and Protection) Act, 1999; the Designs Act, 2000; the Semi-conductor Integrated Circuits Layout-Design Act, 2000.
However, competition issue may arise where the owner of intellectual property imposes unreasonable restraints under intellectual property licensing agreement.