I have earlier written on Section
3 of the Competition Act, 2002 here,
here
and here.
During the course of a discussion, I noticed that Section 3(4) does not provide
for a presumption of appreciable adverse effect on competition (AAEC), unlike
Section 3(3) which gives rise to a presumption of AAEC. What is the consequence
of the difference in the language of the two sub-sections?
Section 3(3) enumerates agreements which “shall be presumed to have an appreciable adverse effect on
competition”, whereas Section 3(4) lists agreements which cause or are likely to cause an appreciable adverse effect on competition. It could be
said that the absence of presumption in the latter translates to higher burden
of proof on the Competition Commission to establish that parties are in
contravention of Section 3(1) by virtue of an agreement which attracts Section
3(4).
In other words, under Section
3(3), so long as the Commission is able to establish that the agreement entered
into by the parties deals with one of the four situations enumerated
thereunder, it shall be presumed, without any further empirical evidence, that
the agreement has an appreciable adverse effect on competition. Such agreements
include the ones which directly or indirectly determine purchase or sale
prices, limit or control production, supply, technical development, investment
etc, market allocation and bid rigging, among others. Simply put, these
agreements shall per se be presumed
to have an AAEC unless such presumption is rebutted.
On the other hand, under Section
3(4) which deals with tie-in arrangements, exclusive supply arrangements, refusal
to deal arrangements and resale price maintenance, the Commission has to arrive
at the conclusion that such agreements have indeed caused AAEC or are likely to
cause AAEC, but cannot be presumed to cause AAEC. Therefore, these agreements
are not per se anti-competitive.
