What are Tie in Agreements?

A tie in arrangement by its very name seems to refer to an agreement or a system whereby thereis some additional condition which is tied to the primary object. Tie-in agreement includes any arrangement requiring a purchaser of goods as a requirement of such purchase to purchase some other kinds of goods. It is also referred to as tying agreement, tying arrangement, tie-in sale, tie-up sale, or clubbed sale. As prescribed under Section 3(4) explanation, tie-in arrangement includes any arrangement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods. The product or service that is obtain by the buyer as per as requirement is called the tying product or service and the product that is compelled or forced to the buyer is called the tied product.

A tie-in agreement under section 3(4)(a) has to tested for its actual or probable adverse effect on the competition, this being the only determining factor as per the instant provision, to be calculated in light of the enumerations made under section 19(3) of the Act. It should be observed that as per the C.C.I., vertical agreements as under section 3(4) do not include consumers since, a manufacturer/service provider and the consumer cannot ever be said to be part of any “production chain” or even operating in “different markets” because a consumer does not participate in production. However, the same is not without dissent.

There are two products in this system. The ‘tying good’ and the ‘tied good.’ The tying good is the one the customer wants to procure and the tied good is the one he is forced to purchase. In the above example obtaining the service of a gas pipeline is the tying product while, the gas stove the company forces on buy is the tied product.

Precedents of Tie-in Deal in India:

  • Shri Sonam Sharma v Apple Inc. and Ors-
  • Ramakant Kini v Dr. L.H. Hiranandani Hospital-

Tie in arrangement is something that is a violation of competition law, and in certain circumstances it may not necessarily be so. In the US some conditions when met, make a tie in arrangement per se illegal, while in India, the same never happens. It is always treated as a case of the rule of reason, as provided for in section 3(4) of the Competition Act, 2002. As time evolves law needs to evolve too.

There will always be elements in society who will try to find ways of bypassing laws by exploiting loopholes. I am honestly of the opinion that in the case of some of the free products that are given along with the purchase of another product is often of the nature of a tie-in arrangement, and are the result of the creative imagination of the Management and legal teams of big corporate houses. What I also feel is that this aspect needs closer attention paid to. Perhaps some analysis of this particular aspect is needed, to truly have fair and free competition. At the same time, such free deals are what makes customers very happy from within, and are sometimes truly a case of mere brand promotion. This is why this aspect needs to be examined in great scrutiny.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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