Do MSMEs Engage in Cartels? A Brief Anti-trust Perspective from India

Abstract

One of the primary objectives of a competition agency isto prohibit cartelssince they injure customers by raising prices and restricting supply, thus making goods and services completely unavailable to some purchasers and unnecessarily expensive for others. Section 3(3) of the Indian Competition Act prohibits agreements in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an Appreciable Adverse Effect on Competition (AAEC) within India. However, co-operation agreements among the SME are often considered a means of ensuring survival and offsetting structural disadvantages. Forms of co-operation whose sole purpose and intent is the restriction of competition are not exempt from a general ban on cartels. Given the above, the paper considers the recent anti-trust cases in India which involved SMEs and looks at the forms of cooperation between them and the specific need for advocacy on competition issues for the SME sector.