Exemptions

The fact that an agreement is restrictive of competition does not mean that it is automatically prohibited unless it is a hardcore cartel as discussed above. Some agreements may be exempted from the Regulations should the firms involved demonstrate that there are efficiencies accruing from the conduct which outweigh the anticompetitive effects.

For example, an agreement between two pharmaceutical companies to develop a new drug together as opposed to independently is likely to be subject to Part 3 prohibition, as the two companies are working together instead of competing with each other. However, the benefits for consumers resulting from such cooperation may outweigh the anticompetitive effects. For instance, the combined investment in research and technology by the two firms may lead to the speed up of the invention of the drug and delivery to the market thus benefitting consumers.

With regard to the abuse of a dominant position, a firm’s conduct may be exonerated because of some efficiency or other benefits which outweigh the anticompetitive effect of the abuse. For instance, a dominant company may be able to show that it has an objective justification for its refusal to supply to a particular customer or competitor such as the poor record of safeguarding intellectual property rights which would entail the protection of legitimate business interests. It would only be when such behaviour goes beyond what is necessary to protect the business interests that this would amount to abuse.