Section 3 of CA, 2002 : Section 3: Anti-Competitive Agreements

Explanation using Example

Imagine a scenario where two major smartphone manufacturers, PhoneA and PhoneB, decide to secretly agree on fixing the prices of their latest smartphone models to avoid competing with each other. They set a minimum price, ensuring that both can enjoy high profit margins without the risk of a price war.

This agreement directly determines the sale prices, which is prohibited under Section 3(1) of The Competition Act, 2002. Consequently, their agreement would be considered void as per Section 3(2) because it causes an appreciable adverse effect on competition within India.

Moreover, since their actions involve price fixing, it falls under Section 3(3)(a) and would be presumed to adversely affect competition. The agreement between PhoneA and PhoneB is a classic example of a cartel, which is explicitly mentioned in the Act as having an appreciable adverse effect on competition.

If this case were to be brought before the Competition Commission of India (CCI), the agreement would likely be scrutinized and both companies could face penalties for violating the Competition Act.