A cartel is an association of several companies operating in the same industry with the aim of regulating prices, terms of sale, areas of influence, production volumes, use of patents, hiring workers, terms of sale of goods. It can be attributed to the simplest monopoly unions. The firms participating in the association retain their legal, industrial, financial and commercial independence.
The agreement of a large number of enterprises of one industry is what, in essence, is the cartel. The definition of this concept was known several centuries ago. In Western countries, such activities of companies are considered an economic crime, therefore, antitrust laws are actively fighting cartel participants, identifying illegal associations. But in some states, such associations flourish and are even encouraged by the government with the goal of standardizing materials, restructuring industry, and restricting competition between small enterprises.
In order to profitably distribute the market, increase product prices, establish a minimum level of salaries, entrepreneurs and create a cartel. This agreement should be signed by as many participants as possible in order to eliminate potential competitors. Inside the cartels, large firms dictate their terms to smaller and unprotected ones, and do not allow parties to the agreement to lower prices for goods.
In countries with market economies, such associations exist in disguise because antitrust laws do not allow such activities to occur. Distinguish between import, export, domestic and international agreements. The simplest is the inner cartel. This is an association of enterprises of one industry within a country. International involve joint activities of firms from different countries involved in the import and export of products. Import cartels are importers of foreign goods, and export cartels are associations of national exporting companies.
In order not to fall under the antimonopoly legislation, such monopolistic associations began to be called gentleman's agreements, conventions, rings or corners, but the essence remains the same. There are cartels in Russia in almost every industry, and this negatively affects pricing. Experts note that if there were no agreements between manufacturers, prices would fall by 2-2.5 times.
Most often, the monopoly is traced among oil companies, in the telecommunications market, among manufacturers of medicines, products, coal, etc. The government is doing everything possible to eliminate cartels, but closing all loopholes is very difficult and almost impossible. Therefore, the most effective method of dealing with unscrupulous entrepreneurs is to promote competition.
A cartel is a relatively short-lived association, because after some time conflicts begin between participants, the balance is disturbed. The stability of the agreement depends on the ability to include or eliminate outsiders, the lack of forces that undermine the cartel from the inside.
