What is an Agreement?
As per the Fair Competition Act 2009, an ‘agreement’ includes any agreement, arrangement or understanding, whether oral or in writing or whether or not it is – or is intended to be legally enforceable.
It can also be extended to trade practices which includes any strategy used by enterprises to restrict competition within a given market.
In fact, Section 11 of the Act provides that agreements between enterprises, trade practices or decisions of enterprises, or undertakings or concerted practices of enterprises that have or are likely to have as their object or effect the prevention, restriction or distortion of competition within Seychelles are prohibited.
Some Examples of Anti-Competitive Agreements
The situation where firms on the same side of the market conspire by means of an agreement to set the price of a service/good they produce at a higher rate, stabilised rate, discounted rate or fixed rate.
Bid Rigging, also known as collusive tendering, is an agreement among businesses on who will submit the winning bid for a particular contract in a tender process.
Resale Price Maintenance (RPM)
An agreement or imposition of the resale price of a good/service to the retailer by the supplier/manufacturer.
RPM could be:
- Directly or indirectly given
- Fixed, i.e. a minimum (floor) or a maximum (ceiling) price a retailer/ distributor can sell within.
Cartel refers to a group of firms joined together to form agreements with regards to their operations in a particular market.
How do these Agreements Exist in a Market?
Horizontal Agreements: Between businesses at the same level of production in a market. E.g. Two Manufacturers.
Vertical Agreements: Between firms at different level of production. E.g Supplier & Retailer.
Why are Anti-Competitive Agreements Prohibited?
- Hinders innovation
- May lead to increase in prices
- Limits consumer choices
- Lack of competitiveness in markets
- Reduces diversity and/ or quality of goods