How Can One Distinguish Cartels from Legitimate Cross-Licensing Arrangements between Competitors

Abstract

Cartels are a focus of concern for many reasons. Cartels cause a locative inefficiency by reducing production in order to raise market price. This forces consumers to pay significantly more money for products, from luxuries like high end art to necessities like vitamins and pharmaceuticals. Fortunately, cartels are inherently unstable. Many of the problems of cartel stability are related to trust. For a cartel to be formed, each participant must trust its cartel partners not to do two things: cheat on the agreement by charging less than the fixed price, or tell antitrust authorities about the cartel. In our article we will try to place all the methods of distinguishing cartels from cross-licensing arrangements between competitors. It is very important to know about cartels and cross licensing arrangements in the competitive world. Cross licensing is legal where as Cartels are legal and illegal both, in Cross licensing there is no such strict requirement of trust but in Cartels trust is required among the members of the cartel. There are two methods for competitors to expose their business and earn profit in case of IP related transactions. Several developed countries have separate laws which are specifically applied to Cartels but in India there is no such law it is governed under the Competition Act.