Horizontal agreement
Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT
Meaning
A horizontal agreement is an agreement among competitors at the same stage of production, such as two manufacturers or two traders. It covers price fixing, limiting output, sharing markets and bid rigging. Under Section 3(3) of the Competition Act 2002, such agreements are presumed to cause an appreciable adverse effect on competition (AAEC), the Act's test of harm to competition. So the firms must prove otherwise. The 2023 amendment also brings in "hub-and-spoke" facilitators. These are parties outside the trade who actively help rivals collude.
Example
In 2021 the CCI fined brewers United Breweries, Carlsberg and AB InBev about ₹873 crore for a beer cartel. The cartel was uncovered through the leniency programme.
Don't confuse with
- Vertical agreement: this is between firms at different levels of the supply chain, such as a maker and a retailer. It is judged under the "rule of reason", so harm must be shown and is not presumed.
Related concepts
- Anti-competitive agreements
- Appreciable adverse effect on competition
- Bid rigging
- Vertical agreement
- Resale price maintenance
- Leniency programme
- Dominant position
- Relevant market
- Abuse of dominance
- Predatory pricing