Types of cartels
As the film The marker demonstrates, cartel behaviour, also known as 'cartel conduct', can take on a variety of forms.
There are four types of cartel conduct. These include:
- price fixing: when competitors agree on a pricing structure rather than competing against each other
- rigging bids: when suppliers communicate before lodging their bids and agree among themselves who will win and at what price
- market allocating: when competitors agree to divide a market and only service their designated portion, so participants are sheltered from competition
- controlling/restricting output: when competitors reach an agreement that is likely to reduce the quantity of goods or services supplied to the market.
Cartels can engage in more than one of these at a time.
Cartel agreements do not have to be formal or written; they can be oral agreements made over a drink at the pub or at an industry association meeting.
There is a form of conduct referred to as a ‘concerted practice’. A concerted practice involves communication or cooperative behaviour between businesses that may not amount to an understanding but goes beyond a business independently responding to market conditions. Further information about concerted practices can be found at Interim guidelines on concerted practices.