A perspective on the single economic entity concept

It has been four years since most of the provisions of the Competition Act, 2002, came into force and the Competition Commission of India became fully functional. However, there are still no guidelines on vertical and horizontal agreements covered under section 3 of the act. A significant aspect in vertical and horizontal agreements is the concept of “single economic entity” or “single economic unit”.

A single economic entity broadly means different companies or entities constituting a single entity from an economic standpoint. From a competition law standpoint, if two or more entities or companies are construed as a single economic entity, agreements between them are not generally considered as anti-competitive, on the principle that a single economic entity cannot enter into an agreement with itself.

Law in the EU

The concept of single economic entity was recognized in the European Union well before the present guidelines on horizontal and vertical agreements were brought into effect. In Viho Europe BV v Commission of the European Communities it was observed that in competition law, the term undertaking designates an economic unit for the purpose of the subject matter of the agreement in question even if in law that economic unit consists of several natural or legal persons.

Udwadia Udeshi & Argus Partners is a full-service law firm with offices at Mumbai, Delhi, Bangalore, Kolkata and Chennai. R Sudhinder is a partner and Mihir Kamdar is an associate partner at the firm. The views expressed in this article are the personal views of the authors and do not reflect the views of the firm.