Comparative Guides

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4. Results: Answers
Cartels
1.
Legal and enforcement framework
1.1
Which legislative and regulatory provisions apply to cartels in your jurisdiction?
India

Answer ... The Competition Act, 2002 governs cartels in India.

Section 3(1) of the act provides that no enterprise or association of enterprises, or person or association of persons, shall enter into any agreement in respect of the production, supply, distribution, storage, acquisition or control of goods or the provision of services which causes or is likely to cause an appreciable adverse effect on competition (AAEC) in India. Section 3(2) of the act states that agreements in contravention of Section 3(1) of the act shall be void.

Under Section 3(3) of the act, agreements between competitors which have the following results are presumed to cause an AAEC:

  • determination of purchase or sale prices;
  • limitation or control of the production, supply, markets, technical development, investment or provision of services;
  • sharing of markets or source of production; or
  • bid rigging or collusive bidding.

However, this presumption is rebuttable and does not apply to efficiency-enhancing joint ventures.

Section 3(5) of the act exempts export cartels and agreements necessary to protect IP rights.

The act contains various regulatory provisions relating to the commencement and procedure of a cartel inquiry, detailed investigation by the director general and various orders (including sanctions) which can be passed by the Competition Commission of India. The Competition Commission of India (General) Regulations, 2009 also lay down the procedure to be followed in cartel inquiries.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
1.2
Do any special regimes apply to cartels in specific sectors?
India

Answer ... There are no sector-specific regimes which apply to cartels in India.

Under Section 54 of the Competition Act, the central government has the power to exempt:

  • any class of enterprises from the application of any provision of the act, if such exemption is necessary in the public interest or for the security of the state; 
  • any agreement or practice arising out of any agreement or treaty with another country; or
  • any enterprise which performs a sovereign function.

In exercising the powers conferred by Section 54(a) of the act, on 4 July 2018 the central government exempted vessel sharing agreements in the liner shipping industry from the application of Section 3 of the act for a period of three years.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
1.3
Which authorities are responsible for enforcing the cartel legislation?
India

Answer ... The Competition Commission is responsible for enforcing the cartel legislation in India. Its decisions may be appealed to the National Company Law Appellate Tribunal (NCLAT) and subsequently to the Supreme Court of India.

The Competition Appellate Tribunal was the appellate body for decisions of the commission until 31 March 2017, when it was replaced with the NCLAT by the Finance Act, 2017.

The act bars civil courts from entertaining any suit or proceeding in respect of any matter which the commission or the NCLAT is empowered to determine under the act. However, there is no bar on the parties approaching various high courts to challenge the jurisdiction of the commission or raise issues of violation of the principles of natural justice by the commission.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
1.4
How active are the enforcement authorities in investigating and taking action against cartels in your jurisdiction? What are the statistics regarding past and ongoing cartel investigations? What key decisions have the enforcement authorities adopted most recently?
India

Answer ... The Competition Commission is very active in taking action against cartels. Up to 2018, 63% of all cases investigated by the commission pertained to cartelisation. As of 31 July 2017 (last published data), 136 of 669 orders issued by the commission contained substantive discussions on cartelisation. In 2018–2019, the commission decided 48 enforcement cases of a total of 68 (including anti-competitive agreements and abuse of dominance). Since 1 April 2019, the commission has imposed penalties in five cartel cases.

Key decisions of the enforcement authorities include the following:

  • In the Flashlights case (Suo Motu Case 01/2017), in spite of the active exchange of information between competitors, the commission held that there was no violation of Section 3 of the act. The commission noted that as the agreement to fix prices had not been implemented, the presumption of an AAEC did not apply.
  • In the Rajasthan Cylinders case (Civil Appeal 3546/2014) the Supreme Court held that, despite identical prices by bidders and a contemporaneous trade association meeting, there was no collusive bidding. The cause for parallel pricing was the nature of the market (oligopsony) and not collusion.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
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Cartels