Anti-competitive agreements are agreements between enterprises or association of enterprises in respect of production, supply, distribution or control of goods or service which may potentially cause an appreciable adverse effect on competition in the market. The word Agreement here includes arrangements and understanding irrespective of whether they are written or unwritten, or whether they are intended to be enforceable by legal proceedings or not. Anti-competitive agreements are further divided into two categories, Horizontal Agreements and Vertical Agreements.

Horizontal Agreements: Agreement between two or more competitors operating at the same level of the supply chain are referred to as horizontal agreements. Horizontal Agreements include the following:

• Price Fixing Agreements: All agreements that directly or indirectly fix the purchase/ sale price or a product or service.
• Controlling Quality or Quantity: Agreements by which competitors agree to limit or control the production, supply, market, technical development, investment or provision of service.
• Market Allocation: Agreements for sharing market or provision of services by way of allocation of geographical area of market, or type of goods or service or number of customers or any other similar manner.
• Big Rigging or Collusive bidding: Agreements between competitors having effect to eliminate or reducing competition for bids or manipulating the process of bidding. This including agreements to submit identical bids, bid rotations, cover bids etc.
• Exchange of price sensitive information: It refers to the sharing of non-public, strategic business data, such as sales volume, production cost, profit margins, planned investments or expansions etc., between competing firms that could reduce uncertainty in the market and harm competition. In many jurisdictions exchange of such information is considered anti-competitive.
• Boycott: Agreement between competitors to refuse to do business with third party.

Vertical Agreements: Agreements between enterprises operating at different levels of supply chain are referred to are vertical agreements. Vertical Agreements include the following:

• Tie-in arrangements: Agreement requiring a purchaser of goods or services, as a condition of such purchase, to purchase some other distinct goods or services.
• Exclusive dealing agreement: Agreement restricting in any manner the purchaser or the seller, as the case may be, in the course of his trade from acquiring or selling or otherwise dealing in any goods or services other than those of the seller or the purchaser or any other person, as the case may be.
• Exclusive distribution agreement: Agreement to limit, restrict or withhold the output or supply of any goods or services or allocate any area or market for the disposal or sale of the goods or services.
• Refusal to deal: Agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods or services are sold or from whom goods or services are bought.
• Resale price maintenance: Agreement to sell goods on condition that the prices to be charged on the resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices lower than those prices may be charged.

• Damage to reputation of the Company
• Heavy fines which can be up to 10% of worldwide turnover or penalty of a much higher amount, depending on laws of various jurisdictions
• Abuse of dominance can result in division of dominant enterprise
• Compensation to affected parties
• Drain of resources in handling antitrust law infringement cases
• Loss of business as potential customers/ investors/ joint venture partner may be put off

One should not discuss or deal in the following, with its competitors:

• Cost of manufacturing products or providing services
• Quantity proposed to be provided
• Credit/ Sale/ Purchase/ Billing terms
• Discounts
• Profits, margins, profitability
• Transportation/Cartage/ Freight/ Distribution charges (or any other charges incurred in the course of provision of services or production of goods)
• Commissions/ Rebates/ Surcharges (or any other such monetary terms)
• Fares, rates, tariffs or any other direct or indirect charges
• Any other business sensitive information

During tendering process, one should be mindful of the following:

• Not to divulge the quantity, rate or terms of the tender the enterprise intends to bid for to any competitor or rival bidder
• Not to hold any discussions or consultations with the competitors or rival bidders prior to placing of bids
• Avoid all forms of communication with competitors or rival bidders, even in case the discussion is with respect to non-tender issues, prior to the closing of the tender
• Not to divulge sensitive information with respect to the tender business i.e. profit margins, cost of production, or any other pricing related issues
• Not to allocate the tender business by way of co-ordination amongst the competitors or rival bidders

Further, following issues should be kept in mind when initiating a due diligence exercise on a competitor in case of acquiring a stake in, control of, or entering into a joint venture agreement or any other business dealing:

• Read the agenda circulated by the trade association carefully
• Ensure full notes are made of the discussions at each meeting
• Not engage in business related discussions at trade association meetings which go beyond the written agenda
• Avoid discussion on any commercially sensitive information
• Avoid attending association meetings organized at a competitor’s premises
• Pricing or other terms given to customers, including discounts
  • Due diligence exercise on a competitor should be conducted via the Legal Department or a third party, and NOT by any member of the company who is associated with the day-to-day operations of the company
  • Personnel on behalf of the Legal Department or the third party should be bound by a Confidentiality/Non-Disclosure Agreement, in order to ensure that the information/data so collected by him/her must not be divulged to any other competitor operating in the same market or commercially used by the company itself which is conducting the due diligence
  • Exchange or transfer of forward-looking planning documents or details of pipeline projects or strategic plans, between competitors can pose anti-competitive risks, as they are considered to be commercially sensitive
  • Cost data, pricing and discount policies that are not publicly available should not be exchanged in course of the due diligence

Working across diverse jurisdictions, we recognize that antitrust regulations can vary significantly by country and are often highly technical, nuanced, and subject to interpretation and change. Accordingly, our employees are expected not only to comply with this policy but also to demonstrate a proactive awareness of the legal obligations that govern their professional activities. This includes understanding the basic principles of competition law, recognizing situations that may pose legal or ethical risks, and taking immediate steps to avoid any conduct that could be perceived as anti-competitive. Because of the complexity of global antitrust frameworks, no employee is expected to have all the answers. However, everyone is expected to exercise sound judgment and seek timely guidance from the firm’s Legal or Compliance Team whenever they are unsure whether a particular action, communication, or business arrangement might raise antitrust concerns.