Please read Part I before you proceed.
Consider there is a dealer X, he wants to sell the goods to other dealers only. In order that to happen, he sells goods to customer at an inflated rate which is not close to what other dealers are providing. In such a scenario, the customer does not like to go to that particular shop to buy the goods. But whereas when the dealers ask him for goods he keeps his margin and sells the goods. This way, the dealer X has a shop and he is making money and he is making sure that others in the community are also making money. In such a co-operative environment, price fixing is bound to happen. Say for example there are now two dealers, X and Y who plan to sell only to the other dealers. In such a scenario these two dealers should be in a pact so that they make money and also ensure that others in the community also make money. If that has to happen then these two dealers will sell at the same price to other dealers and they make sure that they both are selling around the same volumes because they don’t want to erupt the smooth functioning of the sales. Is it fair? In this way, is customer benefitting?
I guess customer is the loser. We have a so called government organization which looks after price fixing. Have you ever heard of it? It is called Indian Monopolies and Restrictive Trade Practices Commission (MRTPC) I don’t know about others. As far as I am concerned I have never heard of it. (I was thinking of writing an article on price fixing and did a little bit of research to find about this commission). India has so many commissions which are not accessible or does it duty properly. We hardly hear such commissions’ existence.
Let me get to another issue. These days due to the telecommunication revolution in India every other telecommunication company in the world wants to be a part of this revolution and has aggressively launched its product in India. I guess the same players are trying to have a pie in China’s telecommunication as well but I have no idea how is it going there. These players want to dominate the market. Do you think that these guys are offering products to Indian customers in a fair way? I guess the answer is no.
Contd in Part III.
Engineer's Finance 