Section 2 clause C of the competition act, 2000 defines a cartel as an association of producer, seller, distributor trader or service provider who buys agreement among themselves to limit control or attempt to control the production distribution and sale of price or trade-in goods or provision of service.
It can be stated that the definition of is wide and inclusive covers as it aims to cover both trade and competition. The main objective of cartel is to raise the price above the level of the competition which results in the injury of the consumers as well as the economy as a whole.
The agreements which are referred to under 82D of section 3 subsection three of the competition act may lead to cartels. Cartels are the most egregious violations of competition law and are widely considered harmful and the competition conducted is prevalent in the market today. Cartel is an agreement between businesses that states that they won’t compete with each other. The agreement is usually verbal and often informal. Generally, the members of the cartel agree on price input level discount credit terms which consumer they will supply which area or territory they will supply and who should win the contract when there is big rigging.
Cartels are presumed to have an easy since competition law seeks to promote and maintain and sustain competition in the market which is beneficial for various stakeholders in the society but in the case of cartel, competitors agree not to compete on price product consumer et cetera and opt for collusion. Cartel is presumed to have an easy since competition law seeks to promote and maintain and sustain competition in the market which is beneficial for various stakeholders in the society but in the case of cartels, competitors agree not to compete on price product consumer et cetera and opt for collision, because of which the consumer and business houses lost the benefit of the competition does it is said that cattle are inherently harmful.
Section 3 subsection three specifically lists the anti-competitive agreement practices or decisions for such an association or cartel that shall be presumed to have an appreciable adverse effect on competition.
The essential ingredients of the cartel are:
1. There must be an existence of an agreement or an understanding between the competitors of the particular industry in the market.
2. Agreement is amongst the producer’s seller distributor trader or service provider that is those parties which are working at the identical or similar trade of goods and services
3. Agreement must aim to limit control or an attempt to control the production, distribution, sale or price of goods in trade or the provisions or conditions on which the services are provided.
VERTICAL AGREEMENTS – Section 3(4) – These other extremes are the agreement between the parties or Enterprises that are at different levels of the production chain such agreements are between a manufacturer and distributor. Generally, they are not treated as an anti-competitive birthday as in the case of horizontal agreement. They are subject to the rule of reason. Therefore these agreements are considered illegal only if they result in some kind of unreasonable restrictions on the competition.
1. The seller usually accepts or agrees to sell goods to a particular buyer only within the territory.
2. The buyer also agrees to buy the product from a particular supplier and no one else.
3. There is a possibility that in the agreement it is determined under which the product can be sold particularly as a divided price location or consumer.
The vertical agreement depends upon the condition and scenarios. It is necessary to take a note of all the aspects in order to assure the working of a company.
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