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VOLUME 2 ISSUE 2
(June 2021)
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INTERNATIONAL JOURNAL FOR LEGAL RESEARCH & ANALYSIS
(ISSN 2582 – 6433)
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Volume 2 Issue 2| June 2021 ISSN: 2582-6433
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DISCLAIMER
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without prior written permission of Managing Editor of IJLRA. The views
expressed in this publication are purely personal opinions ofthe authors and do not
reflect the views of the Editorial Team of IJLRA.
Though every effort has been made to ensure that the information in Volume I
Issue X is accurate and appropriately cited/referenced, neither the Editorial Board
nor IJLRA shall be held liable or responsible in any manner whatsever for any
consequences for any action taken by anyone on the basis of information in the
Journal.
Copyright © International Journal for Legal Research & Analysis
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EDITORIAL TEAM
EDITORS
Ms. Ezhiloviya S.P.
Nalsar Passout
Ms. Priya Singh
West Bengal National University of Juridical Science
Mr. Ritesh Kumar
Nalsar Passout
Mrs. Pooja Kothari
Practicing Advocate
Dr. Shweta Dhand
Assistant Professor
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ABOUT US
INTERNATIONAL JOURNAL FOR LEGAL RESEARCH & ANLAYSIS
ISSN
2582-6433 is an Online Journal is Quarterly, Peer Review, Academic Journal,
Published online, that seeks to provide an interactive platform for the
publication of Short Articles, Long Articles, Book Review, Case Comments,
Research Papers, Essay in the field of Law & Multidisciplinary issue. Our aim
is to upgrade the level of interaction and discourse about contemporary issues
of law. We are eager to become a highly cited academic publication, through
quality contributions from students, academics, professionals from the
industry, the bar and the bench. INTERNATIONAL JOURNAL FOR
LEGAL RESEARCH & ANALYSIS ISSN
2582-6433 welcomes contributions from all legal branches, as long as the
work is original, unpublished and is in consonance with the submission
guidelines.
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‘Global Cartels and their Effect on India’
By : Dr. Arti Aneja
“Cartels in general parlance often refer to the agreement between sellers to collaborate in
order to exploit the demand chain of the market specific to the said cartel which is often
against the interests of the consumers. These agreements. These agreements are severely
disciplined by the Competition Regulators or the Anti-Trust Authorities as the case may be
throughout the world. Few countries such as the U.S., Israel and Brazil consider such
agreements to be tantamount to criminal activities.”
“Although the authorities impose fines upon players convicted of anti-competitive practices,
these pecuniary compensation is directed primarily to the authorities and not the consumers
affected of such substandard products unless there is proof of actual physical hurt or damage.
There have been several examples in the U.S. where it is allowed for the affected parties to
sue the players and recover their damages or losses through private means. The law in India
facilitates the purchasers to recover their damages from the convicted players once their
crime and foul pay is established before the COMPAT followed by the investigations of the
Competition Commission of India. Multinational companies are often the common offenders
of such mala-fide practices as their operations and consumers are diversified and spread
through the Globe. Such cartels have in several circumstances been levied fines and allowed
to carry on their operations in the market as they ensure to maintain an active trade relation
with the Government Authorities.”
“If the seller and buyer in a transaction are from the same country and the transaction takes
place within the country's borders, bringing damages is relatively simple however, the
situation turns rather dilemmatic when the seller and the buyers do not remain as the same
individuals and the transactions is between parties governed by different jurisdictions. To put
it another way, will an Indian company that purchased from a foreign cartel that is being sued
in the US file a damage claim in the US? According to case law in the United States, this
might not be possible.”
‘’GLOBAL CARTELS IN INDIA’’ “Given the recent spike in claims of manipulation (and cartelization) of various globally used
macroeconomic factors, such as foreign exchange, precious metals, derivatives, and oil
indices, as well as the discovery of global cartels in air freight, auto parts, and other areas,
there's a good chance that Indian businesses and consumers have been impacted by these
anticompetitive practises. It is pertinent that the questions regarding the jurisdiction of CCI in
dealing with Foreign Companies. The CCI is empowered to investigate into acts taking place
beyond the bounds of India that might adversely affect its markets.”
“Furthermore, can Indian clients of international cartels sue in the countries where the cartels
worked for damages? This may not be true in the United States, but it may be possible in EU
member states, as stated above. According to the ECJ's ruling in CDC v. Akzo Nobel and
others on May 21, 2015, lawsuits could be filed in the EU jurisdiction where the cartelists are
based or in the jurisdiction where the casual case (cartel agreement) occurred. As a result, to
the possibility that cartels are run by EU-based firms or the key cartel agreement/s is forged
in one of the EU member states, Indian consumers of those cartels could be able to file
lawsuits in those jurisdictions.”
“RECENT LONDON GOLD FIX MANIPULATION”
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“Gold is exchanged on a 24-hour basis on different markets around the world, and rates are
determined depending on supply and demand for gold. The London Gold Fix (Fix) was
developed by the Bank of England in 1919 to set benchmark rates that could be used to value
transactions involving gold buying and selling, as well as financial instruments with gold as
the asset's price. The chairman pushed the price up or down depending on the surplus demand
or supply at each price that was declared before the demand–supply imbalance was below 50
bars. The chairman then declared the official AM or PM London Gold Fix at the price where
the demand–supply imbalance was less than 50 bars. The results suggest that significant
downward swings in gold prices occurred more often before, after, and after the PM fixing
than at every other time of the day. During the years 2001–2013, anomalous statistically
significant drops in gold prices were found in 60–80% of the days preceding and during the
PM fix, according to the report. Since the PM fix coincides with the start of the trading day at
the Commodity Exchange Inc. (COMEX) in New York, it has received more coverage.”
Gold imports increased at a compound annual growth rate of 25% over a ten-year period
beginning in 2003. By 2013, gold imports accounted for the second-largest share of total
imports (11%) in the world. Although some gold imports are in the form of jewellery, gold is
mainly imported in unwrought or semi-manufactured form.1 The consumers of gold who may
be affected by any misuse of the London gold fix are mentioned below.
“IDENTIFYING EFFECT OF MANIPULATION IN INDIA” India is one of the world's biggest gold buyers. In 2014, India's demand for gold reached a
staggering 842.7 tonnes, nearly 29 tonnes more than the next largest user of gold, China.2
India's demand for gold was driven by a growing demand for jewellery as well as gold's
position as a currency and a buffer against inflation. Gold miners and refiners: As previously
said, gold mining and refining in India is restricted to a few areas. Just one gold mine (Hutti
in Karnataka) was operational in 2014, producing just 3 tonnes of gold per year. Because of
the insignificance of miners in the overall Indian gold industry, price manipulation in the
London gold market is unlikely to have a significant effect.
“Importers: Gold is imported in large quantities due to high demand for gold jewellery and
acquisitions, as well as limited domestic mining and processing in India. In reality, imports
account for more than half of India's gold demand. In certain cases, the London set values are
used to value gold that is being imported. If the earlier study results are right, the
manipulation resulted in the London fix being set at a lower price than what would have
existed if the manipulation had not occurred.”
“As previously said, gold exchange-traded funds (ETFs) issue shares that track a business
index, a commodity, or a basket of assets that are traded on a stock exchange. The owners
pay the investment managers a fee for handling the fund. Typically, portfolio managers are
paid a premium depending on the fund's valuation, or the distributions to investors. Although
the circumstance presented above is hypothetical, determining who will be affected, if losses
were sustained, and if so, how much, necessitates a thorough examination of facts of the
alleged manipulation, the method of the alleged manipulation, and micro-level trading data.”
“Although the circumstance presented above is hypothetical, determining who will be
affected, if losses were sustained, and if so, how much, necessitates a thorough examination
of facts of the alleged manipulation, the method of the alleged manipulation, and micro-level
trading data.”
1 “Consolidated Amended Class Action Complaint. (2014, December). In Re: Commodity Exchange Inc., gold futures and options trading litigation (Para 72).” 2 “Sharma, M., & Ananthalakshmi, A. (2015, February 12). India likely to keep lead over China in gold consumption—WGC. Reuters India.”
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“CONCLUSION”
“The bottom line is that Indian firms competing in foreign markets must be aware of
conditions where they could be threatened by international cartels. Not only can the CCI look
at anti-competitive practises in other countries that harm Indian businesses and customers,
but Indian businesses should also be mindful of the harm they are suffering. Large firms in
the EU, such as Michelin and Deutsche Bahn (a German railway company), have been
pursuing lawsuits against cartelists in various EU member states, and have been active in
several cases. This could apply to Indian businesses as well.”