The Science Of ...

How cartels control prices, hinder competition and make life more expensive

(Click here for more "The Science Of" articles.)

A cartel is an agreement between competing firms or entities to control prices or exclude entry of new competitors into a market.

It is a formal organisation of sellers - or buyers - that agrees to fix selling prices, purchase prices or reduce production using a variety of tactics.

The most well-known cartel is, probably, the Organisation of the Petroleum Exporting Countries (Opec).

The Money Show’s Bruce Whitfield interviewed Ros Lake, Director in Competition at Norton Rose Fulbright.

Scroll down for quotes from the audio below.

Cartel members have an understanding that they won’t compete with each other.

Ros Lake, Director in Competition at Norton Rose Fulbright

Cartels can, in limited circumstances, be beneficial.

Ros Lake, Director in Competition at Norton Rose Fulbright

The majority of cartels are designed to elevate pricing.

Ros Lake, Director in Competition at Norton Rose Fulbright

South African cartels aren’t very successful.

Ros Lake, Director in Competition at Norton Rose Fulbright

We have ‘leniency’ legislation in South Africa to incentivise cartel members to expose other members of the cartel.

Ros Lake, Director in Competition at Norton Rose Fulbright

The Competition Act provides for certain exemptions.

Ros Lake, Director in Competition at Norton Rose Fulbright

A monopoly is not necessarily a bad thing. There are some very dominant, very efficient firms.

Ros Lake, Director in Competition at Norton Rose Fulbright

In the last year there’s been four ‘dawn raids’ on suspected cartels.

Ros Lake, Director in Competition at Norton Rose Fulbright

The ‘leniency law’ is the best way to crack cartels.

Ros Lake, Director in Competition at Norton Rose Fulbright

Subscribe to our Business Wrap Newsletter

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
It's (largely) out of sight, but our way of life is based on global shipping

It's (largely) out of sight, but our way of life is based on global shipping

About 90% of world trade is transported on water. We interview the Chairman of Maersk SA about the science of global shipping.

Kit Group supplies uniforms for Africa (with personality and soul, nogal!)

Kit Group supplies uniforms for Africa (with personality and soul, nogal!)

Bruce Whitfield interviews Southern Africa’s leading manufacturer of work attire about the science of the work uniform.

The world is awash in counterfeit money (1 in 30 British pounds are fake)

The world is awash in counterfeit money (1 in 30 British pounds are fake)

SA officials seized R18.5m worth of fake money between 2012 and 2015. It’s a global problem worse than you probably realise.

How online classified advertisers such as Gumtree and OLX work

How online classified advertisers such as Gumtree and OLX work

We interview the country manager for OLX about the science of online classified advertisements.

How Bitcoin may be the death of money (and central banking) as we know it

How Bitcoin may be the death of money (and central banking) as we know it

Money and central banking as we know is about to change radically. We explain the science behind cryptocurrencies…

The science of retail in nation that loves to shop ‘till it drops

The science of retail in nation that loves to shop ‘till it drops

A retail expert discusses the ins and outs of this massively important sector of the economy.

What makes SA’s largest independent insurer and one of our best employers tick?

What makes SA’s largest independent insurer and one of our best employers tick?

Well-known for developing prepaid insurance sold in “starter packs”; we interview Hollard’s CEO…

How South Africa fell hopelessly in love with Soccer Laduma

How South Africa fell hopelessly in love with Soccer Laduma

Millions of South Africans can’t wait for the next edition. The fascinating story of the wildly successful Soccer Laduma…

How small firms are taking on the Goliaths of the hotel sector

How small firms are taking on the Goliaths of the hotel sector

How a tiny hotel group is successfully taking on its much larger rivals....

How groups such as Isis obtain funding for terrorism

How groups such as Isis obtain funding for terrorism

Bernard Hotz, Head of Business Crime and Forensics at Werksmans Attorneys, discusses the science of terrorism funding.

Popular articles
Grace Mugabe invokes diplomatic immunity as Zim-SA relations get tense

Grace Mugabe invokes diplomatic immunity as Zim-SA relations get tense

Grace is still in South Africa and her husband, Zimbabwean President Robert Mugabe, is due to land in the country this afternoon.

Hope Ramaphosa: Cyril never lifted a finger to me, he wouldn't beat a woman

Hope Ramaphosa: Cyril never lifted a finger to me, he wouldn't beat a woman

Cyril Ramaphosa's ex-wife says abuse allegations spread by EFF leader Julius Malema are an attempt to tarnish his reputation.

Bob Mugabe flying in, could sort out his wife's legal woes

Bob Mugabe flying in, could sort out his wife's legal woes

Political analyst David Monyae says this puts everyone including President Jacob Zuma and Robert Mugabe in an awkward situation.

Advanced communication system for Cape's neighbourhood watches

Advanced communication system for Cape's neighbourhood watches

The system allows neighbourhood watches to relay incidents, post warnings or request emergency assistance.

Grace Mugabe has a history of violence

Grace Mugabe has a history of violence

Mail & Guardian Africa editor, Simon Allison says the recent incident of violence by Grace Mugabe is certainly not the first.

Best bank ad ever? Andy Rice reviews Investec’s “you’re more than data”

Best bank ad ever? Andy Rice reviews Investec’s “you’re more than data”

The Money Show’s Bruce Whitfield interviews the advertising expert about the best and worst new advertisements.

[LISTEN] 20-year-old SA woman traumatised by Grace Mugabe's assault

[LISTEN] 20-year-old SA woman traumatised by Grace Mugabe's assault

Gabriella Engels says she is saddened by people who are calling her names on Twitter before they understand the full story.

Discovery CEO (and founder) Adrian Gore bares his soul about money

Discovery CEO (and founder) Adrian Gore bares his soul about money

The Money Show’s Bruce Whitfield interviews Gore about his attitude to money (hopes and fears, successes and failures, etc.).