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CSEET · Economic and Business Environment · Key Government Institutions

Three leading cement manufacturers in a region secretly agree to fix a common selling price for their product. Under the Competition Act, 2002, this arrangement is best described as:

Secret price fixing among competing manufacturers is a cartel, an anti-competitive agreement under the Competition Act, 2002. Horizontal price-fixing is presumed to cause an appreciable adverse effect on competition, unlike abuse of dominance, which involves one dominant enterprise, or combinations, which involve mergers.

  1. AA cartel, which is an anti-competitive agreement presumed to have an appreciable adverse effect on competitionCorrect
  2. BA permitted combination, since no merger has taken place
  3. CAn abuse of dominant position by a single enterprise
  4. DA legitimate joint venture exempt from the Act

Explanation

Agreements among competing enterprises that directly or indirectly fix prices are anti-competitive agreements, and such horizontal price-fixing is presumed to have an appreciable adverse effect on competition. Abuse of dominance concerns a single dominant enterprise, whereas this involves several firms agreeing together. A combination refers to mergers, acquisitions or amalgamations above thresholds, which is not the case here.

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