CARTELIZATI

ON GROUP 6
Jaini Sakhariya 20020341246

Kalakuntla Nikhil 20020341083

Meghana Balla 20020341093

Saket Naik 20020341209

Satwik Singh 20020341223

Aarti Paneru 20020341213

 INTRODUCTION

What Is a Cartel?
● A cartel is a collection of independent businesses or organizations that collude in order to
manipulate the price of a product or service.
● Cartels are competitors in the same industry and seek to reduce that competition by controlling
the price in agreement with one another.
● Tactics used by cartels include reduction of supply, price-fixing, collusive bidding, and market
carving.
● The actions of cartels hurt consumers primarily through increased prices and lack of
transparency.

For example- the Medellin Cartel, which was headed by Pablo Escobar in the 1980s. The cartel
famously trafficked large amounts of cocaine into the United States with fixed pricing.
 INTRODUC
What Is a Cartel?
●
TION
A cartel is a collection of independent businesses or organizations that collude in order to manipulate the price
of a product or service.
● Cartels are competitors in the same industry and seek to reduce that competition by controlling the price in
agreement with one another.
● Tactics used by cartels include reduction of supply, price-fixing, collusive bidding, and market carving.
● The actions of cartels hurt consumers primarily through increased prices and lack of transparency.

For example- the Medellin Cartel, which was headed by Pablo Escobar in the 1980s. The cartel famously trafficked
large amounts of cocaine into the United States with fixed pricing.
 EFFECTS OF
CARTELIZATION
At Cartels end At Customers end

● Assurance of profits ● Higher prices

● Production efficiency ● Lack of transparency
● Monopoly power ● Restricted output
● Ability to withstand business cycles ● Carving up the market
● Barrier for new entrants ● Lack of innovation
 EXAMPLES OF
1. CARTELIZATION
OPEC Cartel- The biggest cartel in the world and an example of an International cartel. OPEC
would coordinate energy policies to ensure fare price for their exported oil and a steady supply
to the market.
2. Cement Cartel- The biggest among the Indian Cartels. In 2001, Birla, Lafarze, Grasim and
some other companies entered into a cartel resulting in price control in Indian market.
3. Telecom Cartel- Telecom sectors like Airtel, Idea and Vodafone try to fix their telecom charges
at a same time, same hike on the same day.
4. Railway Cartel- In recent times, Indian Railway cartel is going on regarding the seats of
compartments. The RDSO changed the material used in their making.
 CARTEL
● In INDIA, Cartelisation is a civil offence prohibited under the Competition Act, 2002

●
PROHIBITION
Cartels are prohibited under Section 3(1) read with Section 3(3) of the Act.

● Section 3(3) of the Act prohibits anti competitive agreements in India, including horizontal agreements
between enterprises

● The Competition Commission of India is the nodal agency which enforces cartel prohibition in India

● The CCI has power to inquire into any alleged cartel arrangement

● Section 32 read with Section 19(1) of the Act empowers the CCI with extra-territorial jurisdiction, thereby
giving it the power to inquire into any cartel operating outside India, which causes or is likely to cause an
AAEC within India
 ACTIONS AGAINST
●
● CARTELIZATION
The Competition Commission of India has been immensely agile in its action against cartels.
Right up to 2018, sixty-three percent of the cases investigated by the Commission exclusively pertained to
cartelization
● As of 31 July 2017, one hundred thirty-six of six hundred sixty-nine orders issued by the CCI bore substantive
discussions on cartelization
● Between 2018 and 2019, the Commission decided forty-eight enforcement cases out of a total of sixty-eight
which included instances of abuse of dominance and anti-competitive agreements alike

Since the inception of the CCI, there have been six instances of dawn raids. Three of such instances took
place in the last twelve months. Notable among them are raids at JCB Limited, Eveready Industries Limited
and also three brewing companies: United Breweries; Carlsberg; and AB-InBev.

DG has also conducted dawn raids at:

● Glencore over alleged collusion on the price of pulses
● French firm Mersen over alleged collusion in pricing equipment sold to Indian Railways and,
● Climax Synthetics Private Ltd, Shivalik Agro Poly Products Ltd, Arun Manufacturing Services Private Ltd and
Bag Poly International Ltd over alleged accusation in relation to bid rigging for the procurement of tarpaulin by
the Food Corporation of India
 ACTIONS AGAINST
●
CARTELIZATION
CCI has delivered final orders, imposing penalty under Section 27 of the Competition Act in several matters
including:
● In Re: Cartelisation in the supply of Electric Power Steering Systems (EPS Systems) v. NSK Limited, Japan
and Others (fine of around INR 340 million, however reduced by 50% under the leniency regime)
● In Re: Alleged cartelisation in supply of LPG Cylinders procured through tenders by Hindustan Petroleum
Corporation Ltd. (HPCL) v. Allampally Brothers Ltd
● Nagrik Chetna Manch v. SAAR IT Resources Private Limited & Others
● Anticompetitive conduct in the Dry-Cell Batteries Market in India v. Panasonic Corporation, Japan & Ors.

● In August 2016, the Competition Commission of India (CCI) levied an immense penalty it has levied to date –
a whopping 63.2 billion rupees- in the infamous Cement Cartel case
● The CCI has imposed a total penalty of over INR 8.40 billion on 126 companies in the last three financial
years for indulging in anti-competitive practices
● During the financial year 2018–2019, the CCI imposed a total penalty of INR 3.37 billion on 77 companies in
17 cases
 LENIENCY
● A leniency programme is provided for under Section 46 of the Competition Act 2002, and supplemented by the Competition

●
PROGRAM
Commission of India (Lesser Penalty) Regulations, 2009 as amended in 2017
The Leniency Regulations govern the procedure and extent to which leniency i.e. reduced penalties can be granted to applicants
who make vital disclosures on cartel activity
● The term vital disclosure of information means full and true disclosure of information or evidence which would be sufficient to
enable the CCI to form a prima facie opinion in relation to the existence of a cartel
● The leniency regulations mandate that the CCI treat the identity and all information received from the applicant as confidential.
The CCI may subsequently, during the investigation process, request the applicant to waive confidentiality over relevant evidence
to enable it to approach other entities which form part of the cartel

MARKER SYSTEM ORal applications

FIRST
APPLICANT
Upto 100% reduction in fines
i.e. complete immunity, to the
applicant who is the first to
make ‘vital disclosure’ to the
CCI
SECOND
APPLICANT
Upto 50% reduction in
penalty to an applicant
which is marked as
second priority
Third applicant
Upto 30% reduction in
penalty to the third and
subsequent applicants
● Applicant can initially
contact the CCI orally
and later submit a
written application
● Can be done to secure
a marker