Vertical agreements generally have restrictions that may have anti-competitive effects, but can nevertheless be justified by the economic benefits they generate. Competition rules in this area balance the potential benefits of restrictions in such agreements with the potential risk to competition. The theory of the silos of exclusive agreements provides that an upstream producer with market power would use such exclusive trade restrictions to prevent a potential new entrant from having access to the vital inputs of a distribution network, which would ultimately prevent market entry, and allow the incumbent supplier to further increase its market share. Exclusive dealer agreements may also exclude competition at the dealer level. The main theory of harm suffered by exclusive supply agreements is that it can lead to market silos of competing suppliers and potential suppliers. This market silos can in turn have negative effects on inter-brand competition. The assessment of an exclusivity agreement under Article 3, paragraph 4 of the Act may also include an assessment as to the possibility of granting exclusivity at issue to other section 3 exceptions. Commission Communication – Communication on minor agreements that do not materially restrict competition under Article 101, paragraph 1 of the Treaty on the Functioning of the European Union (de minimis communication) (OJ L 347 of 31.12.2001, p. C 291, 30.8.2014, p. 1-4) The vertical agreements covered by Section 3, paragraph 4 of the Act are not in themselves anti-competitive. They are anti-competitive only if such vertical agreements have significant negative effects on competition in India.
In accordance with the decision-making practice of the Indian Competition Commission (ICC), vertical agreements only result in aCEC if the company that imposes such vertical restraint has the market power to prohibit competition. Centralcer – Central de Cervejas, S.A. (one of Portugal`s leading beer producers, known as “supplier”) has signed a unique brand agreement with Factorfina Consultores Lda. “Buyer”) in 1997. In exchange for 7,605,000 ESC, the buyer accepted (…) A. Introduction In its judgment of 1 March 2006, England and Wales High Court (hereafter the High Court) made an important decision regarding the separation of a non-competition clause in the context of the termination of an exclusive distribution agreement. The High Court found that (…) In the absence of meaningful market power, inter-brand restrictions in selective distribution agreements are generally acceptable, as there is competition from other brands. The Commission may withdraw the exemption if more than half of the market is subject to similar restrictions. Selective distribution agreements generally include the limitation of branded products on the basis of product criteria. To join the distribution network, resellers must meet certain standards provided by the manufacturer. Unlike exclusive distribution agreements, the number of distributors is not necessarily limited.
An exclusive distribution agreement may manifest itself as a territorial restriction if the supplier agrees to sell its products to a distributor only for resale in a specific territory or as a customer restriction, where the supplier is limited to sales to a particular group of customers.