Professional Documents
Culture Documents
What is Oligopoly?
It is a market situation, where agreements among competitors often raise antitrust suspicions, although
not all relationships between competitors are illegal.
Certain activities do restrict competition and are generally illegal, and in those cases corporate social
responsibility means alerting managers and employees to the practices that may violate antitrust law
through unfair competition.
The Philippines,home of the International Rice Research Institute (IRRI),was for sometime sad to say,at
the mercy of a cartel called the “Binondo Group” or “Big Seven” whose main offices were on Dagupan
Street in Binondo,Manila.
In 1990 Senator Teofisto Guingona exposed the existence of a cartel which handled over 90 percent of
the total rice production of the country.
How did rice cartel operate?
1. Every year during harvest months in Nueva Ecija, Tarlac and other rice-producing provinces of Luzon
the National Food Authority was supposed to conduct its buying operations.
2. But it had a little money to buy palay and few personnel if any at all to go to the field and directly buy
from the farmers
Cartel buyers were able to buy the merchandise at prices dictated by them.
>A cartel is a group of similar, independent companies which join together to fix prices, to limit
production or to share markets or customers between them. Action against cartels is a specific type
of antitrust enforcement.
Instead of competing with each other, cartel members rely on each other’s' agreed course of action,
which reduces their incentives to provide new or better products and services at competitive prices. As
a consequence, their clients (consumers or other businesses) end up paying more for less quality.
This is why cartels are illegal under EU competition law and why the European Commission imposes
heavy fines on companies involved in a cartel.
Since cartels are illegal, they are generally highly secretive and evidence of their existence is not easy to
find. The 'leniency policy' encourages companies to hand over inside evidence of cartels to the
European Commission. The first company in any cartel to do so will not have to pay a fine. This results in
the cartel being destabilized. In recent years, most cartels have been detected by the European
Commission after one cartel member confessed and asked for leniency, though the European
Commission also successfully continues to carry out its own investigations to detect cartels.