CARTELANEESH

AVNIVINAY

KARTHIKDEEPAKSUDHIR

Introduction What is cartel…?

A formal organization of producers and manufacturers that agree to fix prices, marketing, and production.

 Usually occur in an oligopolistic industry. Products being traded are usually commodities.

Types of Cartel: Private cartels Public cartels

Outcomes of Cartel  Price fixing  Market shares  Allocation of territories

Introduction

Long Term Instability Antitrust Law and CCI(Competition Commission Of India)

Drug Cartel

Drug Cartel What is a Drug Cartel

A drug cartel is a criminal organization developed with the primary purpose of promoting and controlling drug trafficking operations and prices .

History of Drug Cartel It started for the very first time in Mexico. Mexican Federal Police agent Miguel Ángel Gallardo ("The Godfather"), who founded the

Guadalajara Cartel in 1980 and controlled all illegal drug trade in Mexico.

Countries affected by drug cartel Japan Russia Italy Israel Columbia

Drug Cartel Market Impacts of Drug Cartel

Pretty Higher Prices Of Drugs and Marijuana. Control over the availability of Drugs and Marijuana in the market. Segmentation of market.

Economic Impacts of Drug Cartel Employment

Agricultural employment Private security and

vigilance Man Power for packing

and Logistics Chemists Lawyers Managers of laboratories Merchants Transporters

Cash flows

1 kg of sugar or any vegetable costs not more than 80 rupee but marijuana more than 15000 rupee .

Even the most expensive drug in the world cost 2Lkhs for 6 months but drugs cost more than 30Lkhs for just half kg.

Investments

Real estate (about 45%), Cattle (about 20%) Other forms of legal

commerce (about 15%) Luxurious Cars and

Housing

OPEC

Basic Facts

OPEC was formed in Baghdad in 1960 to coordinate and unify the policies of petroleum exporting nations

The main objective of OPEC is to ensure the “stabilization of oil prices in international markets” and securing a steady income to oil producing nations

In order to achieve these objectives, the OPEC nations meet at least bi-annually to decide whether to raise or lower their collective oil production in order to maintain “stable” prices

The main factors in their formulating of petroleum policy are the forecasts for economic growth rates and petroleum demand and supply

The 11 OPEC member countries produce about 40% of the world’s crude oil, and therefore have a strong influence on the oil market

Major Sources of U.S. Petroleum Imports (2001)

Country Total Oil ImportsCanada 1.79Saudi Arabia 1.66Venezuela 1.54Mexico 1.42Nigeria .86Iraq .78Norway .33Angola .32U.K. .31Total Imports 11.62

(MB/D)

Summary

While OPEC still has considerable influence in determining the price per barrel of petroleum by restricting output, their success has greatly diminished since the 1970’s

Despite the overall increase in worldwide demand for petroleum, OPEC nations have not received the brunt of this increased demand. Rather, it has gone to Non-OPEC nations

As a result, over the past few years both production and revenues in the OPEC nations have declined significantly

Cement Cartel

CCI- The Cement Cartel of India:(Builders Association of India v. Cement Manufacturers Association)

Complaint filed by the Builders’ Association of India on Cement Manufacturers Association.

The Competition Commission of India indulge price cartel on 11 cement industries

The competition commission found Amiss: 1. Creating artificial scarcity:

Colluded to lower capacity utilisation every year from 2008 to 2011, even though the installed capacity is raised.

2. Price Fixing: By creating this artificial scarcity they were going to raise the prices by forming these cartels.3

The 11 companies were as follows:

Penalised with Rs.6,698-crore by the Competition Commission of India for the price cartelisation.

De Beers Cartel

RISE OF DE BEERS 1869 - Diamond Rush in South Africa. 1888 - De Beers Mine was discovered by Cecil Rhodes. De Beers Consolidated Mines

Limited was established by combining all nearby diamond mining. 1902 - Cullinan Mine was discovered; its owner refused to join De Beers cartel. In the

same year, De Beers absorbed Cullinan Mine. 1927 - Ernest Oppenheimer became the chairman. 1935 - Diamond Trading Co. 1947 - Advertisement for De Beers with a slogan “Diamond is forever” is recognized a lot. 1957 - Harry Oppenheimer succeeds his father as Chairman. 1960 - 2000 - Mines were discovered in Russia, Australia and Canada. 1980 - Captured 90% of world’s diamond production.

FALL OF DE BEERS 1990’s - Soviet Union collapse. Next is Australia and Canada. Market share fell

down to 80% 2001 - De Beers officially ended its diamond monopoly. 2011 – Market share fell down to 40%

Lysine Cartel

Lysine Cartel• TOOK PLACE BY 1990’S• ARCHER DANIELS MIDLAND (ADM) AND ASIAN COMPANIES INVOLVED.• PRICE INCREASED ABOUT 70% IN THE MARKET WITH IN A SHORT SPAN OF 3

MONTHS.• THE CARTEL WAS PROVED BY THE YEAR 1996.• ADM WAS FINED HEAVILY WITH $70 MILLION AND ASIAN COMPANIES WITH

$21 MILLION.

Aviation Cartel

Cartel In Aviation Rival private airlines Jet Airways and Kingfisher Airlines, with a collective market share of over 58 per cent, announced a strategic alliance to help them reduce cost and enhance efficiency. (2008)

The two have also agreed to cross-utilise crew on similar aircraft types and use common training facilities. Passengers can also use frequent flyer programmes by flying in either of the airlines.

"Such alliances are taking place all over the globe such as the one with United and British Airways. and this is the first such alliance in India.“

CARTELS IN AVIATION SECTOR:

Jet Airways and kingfisher Airlines announced that they will be synergizing their operations to tide over the difficult times facing the Indian aviation space.

Aviation Cartel In Europe: The European Commission has fined 11 air cargo carriers a total of €799.445.000 for operating a worldwide cartel which affected cargo services within the European Economic area (EEA).

11 carriers include Air Canada, Air France-KLM, British Airways, Cathay Pacific, Cargolux, Japan Airlines, LAN Chile, Martinair, SAS, Singapore Airlines and Qantas.

The cartel members coordinated various elements of price for a period of over six years, from December 1999 to 14 February 2006.

The case law of the Court and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision is binding proof that the behavior took place and was illegal.

In setting the level of the fines, the Commission took into account the sales of the companies involved in the market concerned, the very serious nature of the infringement, the EEA-wide scope of the cartel and its duration.

Conclusion Cartel is directly or indirectly present in each and every economy. Although cartels ultimately leads to a monopoly in particular sector or industry, but there are still some laws and organizations to curb these kind of unethical organizations which are controlling market conditions.

In India there is an organization CCI(Competition commission of India) which enact the Anti Trust Law of Indian Constitution. Recently CCI has objected the collaboration mergence of SUN Pharmaceutical and RANBAXY for their common products because when they get merged, there is a category of certain products which will come as a single product and according to CCI this may raise into monopoly or a CARTEL.

Thank You……