UNDERSTANDING CARTELS AND THEIR REGULATION IN INDIA
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Abstract
Firms operate solely with a motive of profit and in pursuit of this, these firms generally detest competition as it deprives them of their freedom in market activities like pricing and output. Therefore, competing firms in any market always have an incentive to coordinate their production as well as pricing with an objective of increasing their individual as well as collective profits. This is usually done by restricting the market output that eventually leads to a rise in the market price.
Collusion among independent firms in the same industry to co-ordinate pricing, production or marketing practices in order to limit competition, maximise market power and affect market prices is referred to as a “cartel”.
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