Law of Partnership, Limited Liability Partnership and Competition Law
Indian Partnership Act, 1932
Partnership (s.4) is the relation between persons who agree to share the profits of a business carried on by all or any of them acting for all. Mutual agency is the true test; profit sharing alone is not decisive. Registration is optional, but s.69 bars an unregistered firm from suing to enforce contractual rights, though it may defend. A minor may be admitted to the benefits of partnership (s.30); on attaining majority he must elect within six months whether to become a partner, failing which he is deemed to have elected.
LLP Act, 2008
An LLP is a body corporate with perpetual succession and a separate legal entity; partner liability is limited to the agreed contribution. Minimum two partners and two designated partners, at least one resident in India. No minimum capital requirement. Conversion of firms and companies into LLPs is permitted.
Competition Act, 2002
Section 3(3) presumes horizontal agreements (price fixing, bid rigging, output limitation, market sharing) to be anti-competitive; vertical restraints (tie-in, exclusive supply, refusal to deal, resale price maintenance) require an effects analysis. Section 4 catches abuse of dominance after the relevant market is defined. Section 5 regulates combinations using asset and turnover thresholds revised by notification. The CCI may impose up to 10% of average turnover of the preceding three financial years, and s.46 leniency rewards the first applicant who discloses.
Worked example. Three cement makers agree monthly prices. This is a s.3(3)(a) presumption; the CCI need not prove market effect, and penalty is computed on three-year average turnover, reduced for the first leniency applicant.
Traps. Believing dominance is itself illegal; assuming registration validates the firm; applying per se treatment to vertical agreements.