What is a cartel collusion?

The cartel has always been a disastrous operation for the economy. Along with the syndicate and the trust, this is a procedure banned at the legislative level. About the cartel and its negative impact on the economy and will be discussed in this article.

The concept of cartel collusion

So, what is a cartel? What is its impact on economic and even social relations?

Cartel collusion is an arrangement that is concluded between two or more companies. Can be written or oral. This arrangement is aimed at a strong restriction of competition and, therefore, on making more profit.

The cartel agreement is always a monopoly. This makes this collusion illegal in many states. It also adds the desire to regulate prices, produce products and conduct marketing operations independently. Because of such actions, the output significantly deteriorates, the available capacities in production are limited. Legal entities bear administrative, and sometimes even criminal, responsibility for cartel collusion.

Goals and objectives of cartel agreements

The main goal of all those individuals who organize cartel collusion, of course, is easy to calculate. This is almost a complete removal of competition in a certain section of the market (as a rule, manufacturers consider some plots and sales areas for their own, although in reality they are not such). Having received a controlled market, producers dictate their policy on it: their conditions and rules. It is through this that they can establish the most convenient and optimal prices for themselves.

It is foolish to deny the fact that in today's market for the development of a monopoly can not be avoided. The banal human greed forces manufacturers to unite and increase their own income by raising prices and lowering the output of goods. Undoubtedly, this has an extremely negative effect on the ordinary strata of the population: prices are rising, and the quality of products is deteriorating.

Types of cartels depending on the type of collusion

There are many classifications of types of cartels. Below, only the most basic and known types of cartel agreements will be listed.

Depending on the type of collusion, cartels are divided into two main types: horizontal and vertical. How do they differ from each other? Here everything is quite simple. Vertical cartel collusion is the conclusion of a contract between enterprises (two or more) from completely different spheres of activity. Completely dissimilar enterprises (for example, meat processing and forestry, metallurgical and aircraft building, etc.) are aimed at limiting the flexibility of the market and establishing a monopoly. Accordingly, horizontal cartels represent a written or verbal collusion of companies from a single industry.

Types of cartels depending on the type of activity

World practice identifies the following types of cartel agreements:

• Equity cartel agreements. They are subdivided into quotas and territorial ones. In the first case, participants in an illegal agreement regulate pricing in the market through quotas. In the second case, competition is gradually removed - by conferring collusion on the sales territories.
• Monetary cartel agreements. Equal terms of delivery and payment are approved together with standardized prices.
• Conditional cartels. Agreements of a detailed kind will refute certain conditions for the sale of products.
• Procurement cartels. Quite often the agreements. Their essence consists in knocking down purchase prices by buying several enterprises of the same (or a certain type) products.
• Calculation cartel collusion. In this case, the enterprises agree among themselves to conduct almost the same policy: with similar calculations, a similar structure, and so on.

There are many other types of cartel agreements. However, a certain tendency between all types and types of such conspiracies is, of course, visible. These are the same prices, joint sales, limiting or increasing production capacity, and so on.

On the organization of cartels

Cartel collusion between manufacturers can be concluded either verbally or in writing. Most often, the education and development of cartel collusion is influenced by the relations of producers, that this collusion can conclude. Simply put, the closer and more friendly the heads of companies relate to each other, the higher the likelihood of an illegal transaction between them. The same and vice versa.

The favorite tactic of executives of any companies is the conclusion of a cartel collusion in the conditions of a small number of producers on the market. The fact is that the absence of a large number of companies is excellent for the quick and easy formation of an illegal collusion between manufacturers. If there are too many companies, then the cartel itself will be extremely inefficient: there will be a lot of costs and costs; And the probability of its disclosure will be many times higher.

Factors for the development of cartels

There are a number of factors that can significantly affect the efficiency of cartels. Many manufacturers always pay attention to the presence of such factors. Cartel contracts are never concluded spontaneously. So, what are the signs of cartel collusion, its fruitful work?

Significantly affect the development of the cartel agreement can the type of goods produced. The thing is that horizontal cartels are formed much more often, because it is simply more convenient and effective. However, such a scheme does not always work. For example, it will be much more difficult to create a horizontal cartel in conditions of strong product differentiation in the market.

The next factor is the ease of forecasting demand. In conditions of stable, easily predictable demand, it will be much easier to conclude a cartel arrangement. It will be easy to prove a similar scheme if one looks at states with an unstable market. After all, there are virtually no cartels - they simply are not justified.

And finally, the most important and important factor in the effectiveness of cartel collusion: antitrust law in the state (or rather, its features). There are a number of countries where cartels are not prohibited by law. In this case, the conclusion of various kinds of agreements between manufacturers is justified and legal. And vice versa, with states in which cartels are prosecuted by law. The conclusion of a treaty in such countries is very risky and, as a result, is minimized. However, one extremely interesting detail should be taken into account here: in states where cartels are prohibited by law, the conclusion of a cartel collusion will be more productive for producers than in the countries where they are legalized.

On the dangers of cartel agreements

Undoubtedly, cartels have a very negative impact on both the economic and social spheres of life. But nevertheless it is necessary to understand a little more in detail: what does the cartel collusion entail? Judicial practice highlights many negative consequences of such agreements.

First, it is discrimination of various market participants. Especially such a picture is manifested in cases where there are not many manufacturers on the market. The companies that join the cartel press on other enterprises - all in order for them to also enter into the deal. There is a direct violation of rights. Secondly, this is the imposition of certain conditions on companies that have decided to enter into collusion. Here you can see the lack of independence of producers. And thirdly, it is the creation of an excessively inflated price and, as a rule, a poor-quality product. In this case, the cartel directly harms ordinary people. The law of the Russian Federation prohibits any actions, one way or another, aimed at restricting competition. That is why any cartel agreement of the Criminal Code of the Russian Federation is illegal and lays responsibility for it.

Cartels in the US and Europe

In the West, the cartel is a special form of the transaction. It is not illegal, always and everywhere. In principle, it is possible and even legal to organize a cartel in European states. However, there is one extremely interesting detail.

The fact is that in Europe cartel transactions are divided into "harmful" and "desirable." Companies that have entered into such an agreement with each other should only benefit the economy of the state. Naturally, in the conditions of the cartel, it is rather difficult to do this. However, when it is required to reach more consumers or increase income, the state of such organizations will only encourage. Quite the reverse situation develops with "harmful" cartels. Such organizations often have conflicts with the authorities. With "undesirable" cartels the state is trying to fight in every possible way.

Examples of cartel collusion in the West are hundreds. OPEC (the union of states in the field of mining), for example, the brightest of them. After all, it is distinguished by the fact that it can be called a real cartel collusion between states. By the way, it was with OPEC that a lot of scandals were connected. Several times this organization was even on the verge of closure.

How is the fight against cartels in different countries?

Western countries are trying to fight the cartel organizations by imposing penalties on them. In the United States, for example, the amount of a fine for legal entities reaches $ 100 million, for individuals - $ 1 million. However, a fine can be calculated as a double amount of profit or loss. In this case, participants in the cartel agreement will have to pay the state even billions.

In the Russian Federation, the prosecutors together with the police are fighting the cartels. There is a special department that investigates cases in the field of monopoly policy in the market. The fine for cartel collusion in Russia can reach 20 thousand rubles for officials and 0.15 of the amount earned illegally for legal entities.

The problem of combating cartels

Of course, the fight against cartel organizations is often criticized. And all because of the extremely illiterate antitrust policy. For example, the manufacturer decided to lower slightly or, conversely, to raise prices for its products. In this case, it is already possible to draw up a statement about cartel collusion, which in fact, of course, was not.

There are many economic theories that say that fighting cartels is more harmful than good. To some extent, this is indeed the case. After all, there are examples when the excessively high prices of the producers organized in the cartel served as a signal for other companies, which, in turn, lowered prices and became enriched due to this. Anyway, to date the cartel is illegal. Any company, manufacturer or simple official can apply to the FAS for cartel collusion. A sample of such a statement is presented below.

The problem of stability of the cartel

Of course, the producers of cartel collusion receive a lot of benefits. However, companies can also have problems. Speech in this case is not about problems with the law: the whole point is that the cartel is a very short-lived phenomenon, requiring, in addition, special attention on the part of all the participants who concluded it. Stand or not be able to stand the cartel - depends only on its members. A very important incentive for all producers is that they have concluded a contract. After all, it is worth at least one participant in the cartel collusion to deceive the other participants, to violate certain pre-established conditions, as the entire cartel will collapse.

Cartels have always been and will be short-lived, temporary organizations. Such illegal agreements are more likely to collapse than the state will arrest them. The thing is that different companies that enter into a cartel collusion have completely different demand curves, costs, etc. As a result, persons who enter into a cartel agreement go to very great risks, because the likelihood of harming oneself is very high.