Vertical agreements (‘VAs’) or agreements between companies operating on different levels of the supply chain have increasingly become the subject matter of scrutiny before the Competition Commission of India (‘CCI’). VAs are an important part of how businesses function and CCI’s mandate is to scrutinize only those VAs that may adversely effect competition in Indian markets. VAs that look similar can have different effects on competition and under the Competition Act, 2002 (‘Competition Act’), CCI is required to adopt the ‘rule of reason’ approach in examining these (i.e., balance the anti competitive effects of the agreement against any pro-competitive justifications). Certain types of VAs covering exclusive supply, exclusive distribution, tying and bundling, or minimum resale price maintenance have been identified as anti-competitive agreements under Section 3(4) of the Competition Act and require careful consideration from an antitrust perspective.
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