Evidence in Cartel Cases

Proving the existence of cartels is a difficult task for the Competition Commission of India. Cartels conduct their activities in a secret and clandestine manner. Therefore, it becomes increasingly difficult for the Commission to get any direct evidence or Smoking Gun evidence regarding a cartel and its activities. Definitely, with the passage of time and  the development of special investigative tools, techniques and increase in resources would enable the Commission to gather direct evidence regarding collusive anti-competitive activities. However, at the moment, it is understandable that the Commission would find it necessary to build cases on circumstantial evidence because they have not yet developed effective tools and techniques for acquiring direct evidence. 

Circumstantial Evidence comprises of Communication Evidence and Economic Evidence. Communication evidence implies that the cartel members met and communicated with each other. The same may include records of telephone calls, association meetings, details of travel of representatives of companies to a common destination etc. Economic evidence comprises of the conduct of the firms on the market, elements of market structure which suggest that collusion was feasible and certain practices that can assist in sustaining the cartel.

In the cements cartel matter, the Commission proved the existence of a cartel in the cement industry through circumstantial evidence which included both communication and economic evidence. The order of the Commission can be accessed here. The evidence put forward by the Commission is as follows:

  • Price Parallelism;
  • Under utilization of capacity despite increase in demand;
  • Dispatch parallelism;
  • High operating profits;
  • Regular communication of Competitors through the association i.e. CMA
  • Collection of sensitive information like prices, production & dispatch details etc. from cement companies by CMA;
  • Circulation of the aforesaid sensitive information by CMA to all members;
  • Homogeneous product.

Taking a holistic consideration of the aforesaid evidence, the cumulative effect of the same is convincing to infer the existence of a cartel. Another plausible argument which the Commission could have put forward was that the regular circulation of pricing & production information by CMA to all the members is to enable the cartel members to monitor whether all cartel members are acting in accordance with the cartel agreement, Monitoring is one of the most important aspects of sustaining a cartel. Another aspect that the Commission could have discussed is that the conduct of the concerned enterprises was inconsistent with ‘unilateral self interest’. Considering that the increase in prices was not due to any major change in variable costs, wouldn’t it be in the self interest of enterprises to not increase prices (while other competitors are doing the same) and thereby increase their sales and market share.   



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