Cartels are prohibited under Section 3(1) read with Section 3(3) of the Act.

  Section
2(c) of the Act defines a cartel to include an association of producers, sellers,
distributors, traders or service providers who, by an agreement amongst themselves,
limit control or attempt to control the production, distribution, sale or price of, or
trade in, goods or provision of services.

It can be contended on behalf of Appellant that, as there was no agreement between

the companies to limit control or attempt to control the production, distribution, sale
or price of, or trade in, goods or provision of services it cannot be said that the cartel
formed by these company had appreciable adverse effect on competition hence no
penalty could be attracted on the basis of Section 3 and 4 of the act. 

Section 3(3) of the Act is the specific substantive provision which prohibits anti-

competitive agreements in India, including horizontal agreements (and cartels),

between enterprises which:

1. directly or indirectly determine purchase or sales prices;

2. limit or control production, supply, markets, technical development,
investment or the provision of services;
3. allocate geographic markets or customers; or
4. directly or indirectly result in bid rigging or collusive bidding.

Such agreements are presumed to have an AAEC and are consequently void.

However, in In Re: Express Industry Council of India and Jet Airways & Ors. (Case No.

30 of 2013), a case relating to a cartel for the fixing of the fuel surcharge for cargo

transport by airlines, the CCI considered the fact that the airlines were incurring

losses and had substantial debts when deciding the quantum of penalty.

The pandemic, coupled with recessionary trends all over the globe, has severely affected
the Indian economy. For the first time, despite growth in the agricultural sector, there
has been a fall in the GDP of the country. Industries are one of the major causes for
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concern with sectors like automobiles, aviation, oil and manufacturing operating at
overcapacity, resulting in losses. In order to manage costs, a huge number of layoffs are
also taking place. Restructuring would permit these sectors to return to profitability,
thereby fostering competitiveness. On the other hand, some sectors like pharmaceuticals
and food supplies are facing severe shortages owing to heightened demand. By allowing
such cartels temporarily, the survival of competitors who would otherwise have been
forced to shut down is ensured. This not only keeps them active on the market post the
pandemic, but also resolves the employment issue as the continued existence of the
companies saves jobs. 3

Under section 19(3) of the Competition Act, before declaring an agreement as having an
AAEC, the CCI considers factors like benefits to consumers or economic, technical and
scientific development. While considering section 19(3) as one of the inherent safeguards
in the Act, the CCI allowed companies like essential services and medical commodities to
share distribution and logistics only in certain cases; it warned them to not exploit this
situation. The formation of crisis cartels furthers this very purpose and is aimed at
increasing efficiency, with the pro-competitive effects outweighing the anti-competitive
aspects.
Arguably, the Indian antitrust regulatory framework is also flexible enough to
accommodate the establishment of such an arrangement. Section 54 of the Act
empowers the Central Government, in certain circumstances (for public interest or for
security of the State, for instance) to suspend the applicability of the provisions of this
legislation for a period of time. Using this power, the Ministry of Corporate Affairs has,
in the past, exempted national, rural and regional banks from section 5 and vessel
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sharing agreements from section 3 of the Act. Once the affected sectors are identified, it
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becomes possible to exempt them from the applicability of section 3 of the Act, the
charging section for cartel conduct. Section 54 can further the making of crisis cartels, if
the Government carefully and with caution identifies the class of enterprises which
should be exempted, instead of announcing a blanket exemption which may lead to
misuse.

The CCI has often looked at jurisprudence from the EU, taking cognizance of
internationally recognized standards and practices in order to arrive at a just and fair
resolution by taking into consideration relevant evidence, etc. For example, the CCI
took note of the approach in the EU regarding information exchanges in the Cement
Cartel case while adjudicating upon the matter. 42 It would be in the best interests of
the CCI to ensure a uniform approach is adopted by it, one which would help further
its own cause. It should not shy away from relying on the past efforts at regulation to
determine the effectiveness of the measures employed.

Notably, CCI, the antitrust watchdog of India acknowledging the submission of the
parties and the investigation report submitted by the DG, observed, "nothing can be
more incriminating than these". The Commission delved into the legislative intent
behind the provisions of the Act prohibiting cartelization and collusive bidding and
rejected the contentions of the OPs concerning the lack of AAEC in market. The CCI was
of the view that the scope of Section 3(1) is wide enough to bring within its prohibitory
ambit, not only the agreements causing AAEC but it also puts and embargo upon the
agreement, which are likely to cause AAEC in the market at some future point of time.
Furthermore, the Commission relied on the decision of the Indian Supreme Court in the
matter of Rajasthan Cylinders and Containers Ltd. v. Union of Indian , and observed
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that where the agreement in question falls under the category specified under section
3(3) of the Act. In such cases there follows a presumption that the Agreement has an
AAEC on the relevant market within India and the burden shift upon the opposite
parties to rebut such presumption by bringing substantial and adequate evidence on
record before the Commission.

section 3(3) deals with agreements between persons, or concerted practices or

decisions of associations of enterprises which have anti-competitive effect. It,

therefore, covers multiple possibilities that go beyond "agreement". Practices

carried on, decisions taken, by an association of enterprises including cartel are

various devices which cannot be taken to be agreement, but may have adverse

effect on competition. The possibilities of evading the prohibitory provision, through

such devices, are removed. The term "agreement" has been defined in section 2(b),

which has already been discussed. Agreement may not be formal and written. It

may be informal, oral, or non-binding. A concerted practice is even less formal than

an agreement. It could be defined as a form of co-ordination between enterprises

which has not yet resulted in the conclusion of a contract within its real meaning,

but consciously substitutes competition connected with risks by practical co-

operation. Thus, such practice exists when there is informal co-operation without a

formal agreement. An arrangement between the parties, however informal, agreeing

to share know-ledge of their business decisions, may amount to concerted practice.

Concerted practice in terms of the decision of the European Court of Justice in Re

the European Sugar Cartel; Cooperative Vereniging 'Suiker Unie' UA v. Commission

(1975) ECR 1663/(1976) 1 CMLR 295, means —

"direct or indirect contract between (competitors), the object or effect whereof is

either to influence the conduct on the market of an actual or potential

competitor or to disclose to such competitor the course of conduct which they

themselves have decided to adopt or contemplate adopting on the market."