Criminalization of Cartel Offenses in India.
Author: Keerthikah.A, School of Law, Mumbai University.
The cartel offences have been a global problem slowing disrupting the economy of the world. The developing countries have been known to be more vulnerable than the developed countries. India, being a developing country has gone through its fair share of cartel offence cases. In India, cartel offences are merely civil offences and they do not come under criminal offences. The main topic of discussion is the criminalization of these offences acting as a greater deterrent effect than the offence being classified under administrative law. The severity of these offences also acts as a driving point to criminalize it. Cartel offences are criminal offences in various countries like the US while the UK classifies it as both civil and criminal offences, the stand of India will be addressed in this article. This article further emphasis on the reasons for criminalizing cartel offence in India and whether the criminalization will be a deter the course of this offence.
Cartel offence come under civil offences in India, it has been compared by many to be akin to a cancer spreading slowly and severely affecting the economy of a country. The Section 2(c) of the Competition Act, 2002 defines cartel as an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services. Simply put, a cartel is a group of producers who come to an agreement to manipulate prices to regulate the supply in the market. There are certain forms of cartel, price fixing, sharing markets, rigging bids and controlling supply of goods and services. Cartel practices have negative impacts on the competition as the competitors work together to manipulate prices which increases prices and restrict supply. Due to these consequences, laws have been implemented to stop these practices.
Why Cartel offences must be criminalized?
Competition Commission of India (CCI) is a body which is in charge of enforcing cartel prohibition in India. As cartel offences do not come under criminal offences, the CCI can only impose punishments in monetary forms. Under section 27(b) the Commission can impose three times of the amount of profits made out of such agreement by the cartel or ten per cent of the average of the turnover of the cartel for the last preceding three financial years, whichever is higher. This can led to a less deterrent effect as compared to punishments for criminal offences, as the fear of imprisonment prevents people from committing the offence. Cartel offence has been criminalized in US for more than a decade, the punishment is up to five years in prison for the most severe cases. Whereas in UK, it is both a civil and criminal offence. It imposes criminal offence if the culprit is an individual.
Cartels have a negative impact on the consumers as they increase the price of the product and restrict the entry of new producers. Competition in the market leads to producers innovating or improve their services or product to remain at par with their competitors but in a cartel situation the producers do not have to pay heed to their consumers. This leads to severe disadvantage to the consumers. The elasticity of demand is disrupted in these cases which in turn affects the economy.
The negative effects of cartels are evident but the question that arises is whether the criminalization of cartel offences will deter this practice in our country. An attempt to implant a criminalization regime into a non-receptive environment risks leads to an “unenforced criminalization”, the social cost of which may be higher than a lack of criminalization to begin with. It is important that the society understands the severity of this offence before it is criminalized so that the implementation of this offence is a success. The other reason for the non-criminalization of the offence is that it only covers hard-core cartel cases and it is difficult to detect these offences.
Even with these drawbacks, Criminalization will lead to change in perspective about cartel offences in the society. Cartel offences increase the price of the products to a great extent and it has been seen that the developing countries are more vulnerable to these offences. Hence it is imperative for the government to take criminalize this offence.
The Criminalization of the cartel offence is important as it will give this offence the much-needed severity. The criminalizing cartel offence has helped US tackle this problem and it might have the same effect on India as well. India being a developing country should be more vigilant as the economy of the country is worsening day by day. Criminalization cartel offence should be the first step to curb its spread. Programmes such as bounty hunting or whistle blowers should be encouraged. Whistle-blowers will be more likely to be present if the punishment for these offences are severe. Severe consequences prevent people from doing a particular offence, this might act as a driving factor in putting a stoppage to these offences.
 The Competition Act, 2002, No. 12, Acts of Parliament, 2002(India).
 Ariel Ezrahi and Jioi Kindl, CRIMINALIZATION OF CARTEL ACTIVITY – A DESIRABLE GOAL FOR INDIA’S COMPETITION REGIME, Manupatra.