Vertical Agreements Research Paper

HORIONTAL AGREEMENTS
Horizontal agreements are co-operative agreements that are entered between the competitors of the same industry . The primary objective of competitors to enter into a friendly agreement is to avoid the competition and regulate the market according to its own whims and fancy. The major subject matters of these agreements relate to pricing of the product, distribution channel, selling strategies and the production channel. The competitors agree to share details of the product as well as the market that it would target. These agreements tend to violate the antitrust laws as they work towards eliminating the competition from the market.
This agreement causes an adverse affect on the market but largely benefits the competitors

The positive impact of the vertical agreement on the market.
2. The negative impact of the vertical agreement on the market.
The subject matter of such agreements relate to tie-in-agreements, exclusive supply agreements, refusal to deal with the third party, exclusive distribution agreements etc. The validity of such agreements are analysed in accordance with sec 3(4) read with sec 3(1) of the Competition Act,2002. These agreements are subjected to such conditions to check if they have created an AAEC .
These agreements are treated leniently as compared to horizontal agreements it is because unlike the horizontal agreements the nature of vertical agreements can be pro competition also . The key factor that allows the vertical agreements to be prohibited by law is if the competitors that are entering into the agreement hold a major dominant position in the market as this edge would allow the agreement to create an adverse effect on the market.
Thus vertical agreements can be both harsh as well as render no effect to the market as unlike the horizontal agreements that are presumed to harshly effect the

The concept of AAEC has been discussed in sec 3(3) and sec 3(4) which states that any agreement that creates an AAEC shall deem to be void. The term has not been defined in the act anywhere but the term “appreciable” according to the Law Lexicon has been defined as follows:
“Capable of being estimated, weighed, judged of or recognised by the mind, capable of being perceived or recognised by the senses, perceptible but not a synonym of substantial”
The nature of AAEC is subjective and based on estimation. AAEC will be estimated differently for different cases. It will depend upon the circumstances of each case and cannot be just presumed. The agreement so entered by the competitors must have an appreciable effect on the market so as to qualify itself for being restricted by the competition law. Some of the parameters to judge the effect of the agreement on the market are as follows:
• The aggregate of business that is being controlled by the competitors.
• The remaining strength of the