Agreement between enterprises of the same industry to control price
Agreement between enterprises of the same industry to control price, production or marketing practices in order to restrict competition, maximize monopoly and affect market prices where there are few number producers operating in the relevant market is referred to as a cartel. No criminal liability is imposed on cartel members for cartel conduct under the Competition Act. It only covers the administrative liability imposed can be for cartel conduct under the Act. The main intent behind a cartel conduct is to raise price above competitive levels, which will cause loss not only to the consumers but also to the producers, as a result it affects the economy as whole.
Cartel agreements can be result of either explicit agreement or implicit collusion and are often difficult to detect. Usually, competition authorities detect cartel while conducting investigation. Leniency program is one of the best ways to detect such agreements because the cartel activities are so secured that internal information is required to disclose such agreements. By giving them incentive to cheat they can be compelled to confess their anti-competitive practices. Section 46 of the Act and the Competition Commission of India Lesser Penalty Regulations, 2009 are the basic laws which deal with leniency program in India. It provides protection to the person who disclosed all the relevant information about the cartel who would otherwise face stringent actions if the cartel is detected by the Commission itself.
In providing a kick start for the proper implementation of program in India there is a need to refine the concept of leniency program by harmonizing it with other successful and established leniency regime of developed nations. This will not only bring uniformity but will also lead to proper implementation of the program by attributing transparency and certainty to leniency practice which will ultimately crackdown cartels. The recent amendments such as in the provision regarding inclusion of individual in the definition of applicant and extension of number of application to the Act has been a massive step towards the detection, investigate and eradicate cartels.
