What is a Cartel?

Learn about Cartels with Ajay Devgan
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Once Upon a Time in Mumbai 2010

Case breakdown: Movie Once upon a time in Mumbai

The scene that you saw shows how Sultan (played by Ajay Devgan) is trying to be a peacemaker. He plays a role of a smuggler in the movie. His major achievement in the scene is that he succeeds in bringing together everyone who actually wants to kill each other. He suggests that they should all work together to extract the most benefit. Later he divides the city among four gangsters and decides that all should work together. He does this for the sole purpose of promoting and controlling drug operations in Mumbai.

What is a Cartel?

Cartels are formed in organizations as well. A Group of producers joins hands to control and manipulate the prices of the product. They are generally independent businesses or countries that act as a single producer who can fix the prices of the goods and services without competition. When they act as a single producer, they can reduce supply and manipulate the market by increasing prices. This affects customers as they have to pay higher prices.

OECD (Organization for Economic Cooperation and Development) which is an international organization that works to build better policies. Along with the governments, it builds policies to detect cartels. It says “Strong sanctions are a fundamental component of an effective antitrust enforcement policy against hard core cartels.”

According to section 3(1), cartels in India are prohibited and are a civil offense forbid ed under the competition act of 2002.

Many times cartels aim to increase the prices of the product and output restrictions hence they are disadvantageous to the customers. Cartels also act as a barrier for new entrants to the market.

Drug Cartels are criminal organizations. Their intention is to supply and maintain a drug operation chain. Sinaloa Cartel is the biggest drug cartel in the world and operates in Mexico. The Sinaloa Cartel operates in the “Golden Triangle” in the states of Sinaloa, Durango, and Chihuahua.

References:

https://www.oecd.org/competition/cartels/

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