By Ayushi Singhal, NUJS Editor’s Note: It often so happens that when a law, whether in the form of an act, a rule, order or anything of that category is passed, it is not exploited for several years. One of many such provisions is the Competition Commission of India[i] (Lesser […]
A cartel is a group of similar, independent companies which join together to fix prices, to limit production or to share markets or customers between themselves. An important dimension in its definition is that it requires an agreement between competing enterprises, not to compete, or to restrict competition. Therefore, the objective of a cartel is to raise price above competitive levels, resulting in injury to consumers and to the economy. This is why cartels are illegal under EU competition law and why the European Commission imposes heavy fines on companies involved in a cartel. A comparative analysis of the EU competition law with the Indian law would provide us with a better perspective on the issue.
One of the main objectives of competition or antitrust laws is to ensure that consumers pay the most efficient price coupled with the highest quality of goods and services they consume. However, when there are activities which hamper the competition, it has adverse effects not only for consumers but the economy of a nation as well. One way to hamper the competition and creating monopoly in the market is forming cartels. They allow small and inefficient competitors to join together at the expense of their customers, therefore, resulting in an antithetical relationship.