Agreement in restraint of trade is a legal term that refers to any contract or agreement that restricts the ability of individuals or businesses to conduct trade freely. In India, such agreements fall under the purview of competition law, which is overseen by the Competition Commission of India (CCI).
The CCI has been established to prevent anti-competitive practices and promote fair competition in the market. As per the provisions of the Competition Act, 2002, any agreement in restraint of trade is considered to be an anti-competitive practice and is prohibited under the law. Such agreements are deemed to be void and unenforceable, and can be challenged by any party that is affected by them.
Under the Competition Act, an agreement in restraint of trade is defined as any agreement that directly or indirectly restricts the following:
1. Production
2. Supply
3. Distribution
4. Acquisition
5. Technical development
6. Investment
The Act further states that such agreements can be challenged if they have the potential to cause an adverse impact on competition in the market, lead to the abuse of a dominant position, or adversely affect the interests of consumers.
It is important to note that not all agreements that restrict trade are considered to be anti-competitive. The Competition Act provides for exemptions for certain agreements, such as those relating to research and development, intellectual property rights, and joint ventures, among others. These agreements are subject to certain conditions and must be notified to the CCI for approval.
In conclusion, an agreement in restraint of trade is a serious issue in India, and any party that is affected by such an agreement has the right to challenge it. It is important for businesses to ensure that their agreements are compliant with competition law and do not restrict free trade in any manner. By doing so, they can avoid running afoul of the law and ensure a level playing field for all players in the market.