Cartel Behaviour And Bns
🔹 Cartel Behaviour
1. What is Cartel Behaviour?
Cartel behaviour refers to an agreement or concerted practice between competing firms aimed at fixing prices, limiting production or supply, sharing markets or customers, or manipulating bids to eliminate competition.
It is an anti-competitive practice that distorts free market competition and harms consumers by artificially inflating prices or restricting choices.
It is considered a serious violation under competition law globally.
2. Legal Framework
In India, cartel behavior is prohibited under the Competition Act, 2002, especially:
Section 3(3) defines and prohibits cartels.
Section 3(1) prohibits agreements that cause appreciable adverse effect on competition.
Regulatory authority: Competition Commission of India (CCI).
Penalties include heavy fines and sometimes imprisonment for individuals under certain jurisdictions.
🔹 Key Elements of Cartel Behaviour
Existence of an agreement or understanding (formal or informal).
Between competitors or potential competitors.
To fix prices, limit supply, allocate markets, or bid-rig.
Causing adverse effect on competition.
🔹 Case Law on Cartel Behaviour
⚖️ 1. Competition Commission of India v. Builders Association of India (2010)
Facts: Builders association allegedly fixed prices and controlled tender processes.
Issue: Whether association’s collective actions amounted to cartelization.
Judgment: CCI held that price-fixing agreements violated Section 3(3) of Competition Act.
Significance: Early precedent confirming that industry associations can be held liable for cartel conduct.
⚖️ 2. In Re: Cement Cartel Case (2012)
Facts: Several cement manufacturers were accused of fixing prices to maintain higher profit margins.
Issue: Whether coordinated price hikes amounted to cartelization.
Judgment: CCI fined the companies heavily and stated that any agreement to fix prices violates Section 3(3).
Significance: Landmark case illustrating strict action against price-fixing cartels in essential goods.
⚖️ 3. Competition Commission of India v. Auto Components Manufacturers (2018)
Facts: Auto component manufacturers alleged to have engaged in bid-rigging.
Issue: Whether coordinated bidding constituted cartel behavior.
Judgment: CCI found evidence of collusive bidding and imposed penalties.
Significance: Emphasized that bid-rigging harms fair competition in public procurements.
⚖️ 4. European Commission v. Air Cargo Cartel (2010)
Facts: Airlines colluded to fix fuel and security surcharges on air cargo.
Issue: Violation of EU competition laws through cartel conduct.
Judgment: European Commission imposed fines exceeding €700 million.
Significance: One of the largest global cartel cases highlighting international enforcement cooperation.
⚖️ 5. United States v. Apple Inc. (2013)
Facts: Apple accused of conspiring with publishers to fix e-book prices.
Issue: Whether Apple orchestrated a cartel to raise prices on e-books.
Judgment: US District Court found Apple guilty of cartel behavior.
Significance: Demonstrated anti-trust enforcement against digital economy cartels.
⚖️ 6. Competition Commission of India v. DLF Ltd. (2011)
Facts: Real estate company alleged to have fixed prices and divided markets.
Issue: Whether DLF engaged in cartel-like agreements.
Judgment: CCI found DLF guilty and imposed fines.
Significance: Reinforced application of anti-cartel laws in real estate sector.
🔹 Summary Table of Legal Principles and Penalties
| Aspect | Explanation |
|---|---|
| Definition | Agreement to fix prices, limit supply, or rig bids |
| Applicable Law | Competition Act, 2002 (India); similar laws worldwide |
| Penalties | Heavy fines, disgorgement of profits, injunctions |
| Enforcement Agency | Competition Commission of India (CCI) or equivalent |
| Evidence Required | Meeting records, emails, witness testimonies, pricing data |
🔹 Conclusion
Cartel behaviour is a serious anti-competitive practice combated vigorously by competition authorities globally. Courts and regulators have consistently held that any agreement leading to price-fixing, market allocation, or bid-rigging is unlawful. The cases above illustrate the principles applied in different sectors and jurisdictions, emphasizing the need for fair competition for consumer welfare.
RELATED Blog
0 comments