JVs and competition law: Uncertain times ahead

The Competition Act, 2002, aims to promote competition and to prevent practices that adversely affect competition. The Competition Commission of India (CCI) is the statutory body created to enforce the act.

Sections 3 and 4 of the act, which came into force on 20 May 2009, aim to prohibit anti-competitive agreements and abuse of dominance respectively. Sections 5 and 6 (analogous to “merger control” laws in other jurisdictions) have not yet come into effect. When they do, they will regulate combinations (mergers and acquisitions of enterprises which meet the specified thresholds).

The substantive test under the act is whether an agreement or practice or conduct causes, or is likely to cause, an appreciable adverse effect on competition in India. Joint ventures (JVs), though not specifically defined under the act, may be examined under section 3 as horizontal arrangements, or under section 6 as combinations, and so raise issues for corporates that want to proceed with one.

Pallavi Shroff is a partner and Harman Singh Sandhu is a senior associate-designate at Amarchand & Mangaldas & Suresh A Shroff Co. Nandita Govind, a senior associate at the firm, assisted with this article. The views expressed are those of the authors and do not reflect the official policy or position of Amarchand Mangaldas.