Cartels Are a Real Threat to Indonesia's Economic Growth

In the business world, healthy competition is the key to success. However, not all business people play fair and prioritize good business ethics. One of the business practices that undermine competition is cartels.

Cartels are often identified as agreements between companies in a single industry to control prices, production, and markets. These unethical business practices affect the profits and prices of products, even harming consumers. Cartels can also undermine healthy competition in the market, thus hindering overall economic development. In this article, we will take a deeper look at cartels, what they are, the signs of their presence in the market, and their negative impact on businesses, consumers, and the economy as a whole. In addition, we will also discuss efforts to prevent and handle cartels to help you understand the dangers of cartels and avoid being trapped in them.

Cartels are ...

A cartel is a term that refers to a group or association of companies that work together to control the market and increase the price of goods or services. Cartels are usually formed from companies that are supposed to compete with each other, but instead work together to maximize their profits.

Understanding Cartels

Cartel Definition

A cartel is a form of coordination between several companies that join forces to control the price of goods or services in the market. Cartels are usually formed by companies that are supposed to compete with each other, but instead work together to maximize their profits.

Types of Cartels

There are several types of cartels, including:

• Price cartel: Companies that join a price cartel seek to control the price of goods or services in the market.
• Production cartel: Companies that join a production cartel seek to limit the amount of production of goods or services in the market.
• Territorial cartel: Companies that join a territorial cartel seek to limit the marketing area of goods or services in the market.

How Cartels Operate

Cartels usually operate by holding meetings between companies to discuss the price and production of the goods or services produced. In this meeting, the companies that are members of the cartel will reach an agreement on prices and production that are favorable to them.

Negative Impact of Cartels

Economic Impact

Cartels have a negative impact on a country's economy, especially on the affected industrial sectors. Cartels can reduce the amount of competition in the market, resulting in higher prices for goods or services than they should be. In addition, cartels can also limit the amount of production of goods or services, thus causing a decrease in supply and an increase in the price of goods or services.

Consumer Impact

Cartels also have a negative impact on consumers, because the price of goods or services raised by cartels will become more expensive. Consumers will also find it difficult to get the goods or services they need, because the supply of goods or services is limited.

Social Impact

Cartels also have a negative social impact, especially for workers in industries affected by the cartel. Cartels can lead to reduced production numbers and company closures, resulting in many workers losing their jobs and having difficulty finding new jobs.

Legal Aspects of Cartels

Legal Framework Overview

Cartels are a violation of competition law in many countries, including Indonesia. In Indonesia, cartel law is regulated in Law Number 5 of 1999 concerning the Prohibition of Monopoly Practices and Unfair Business Competition.

Punishment for Involvement in Cartels

Cartel perpetrators can be subject to legal sanctions, such as large fines and even prison sentences. In addition, companies involved in cartels can also be punished by not being able to participate in tenders or government contracts.

Enforcing Antitrust Laws

The government must firmly enforce antitrust laws to prevent the formation of cartels. The government must have strong authority to punish cartel actors, including large companies involved in cartels.

Examples of Cartels

Historical Examples

One example of a well-known cartel is the Organization of the Petroleum Exporting Countries (OPEC), which was formed in 1960 by the world's major oil-producing countries. OPEC controls oil production and prices in the global market.

Latest Examples

A recent example of a cartel is pharmaceutical companies that engage in cartel practices to raise the price of essential drugs. Several major pharmaceutical companies around the world have been shown to be involved in this cartel practice.

Case Studies

A well-known case study of cartels is a cartel formed by a car manufacturer in Japan in the 2000s. The cartel aims to control the price of auto parts, and jeopardize the competition of the auto industry in Japan.

Preventing and Combating Cartels

Detecting Cartels

The government can detect cartels by conducting careful market investigations. The government can also strengthen the reporting system for cartel practices and strengthen cooperation with antitrust bodies in other countries.

Proactive Action

Governments can take proactive measures to prevent cartels from forming, such as increasing competition in the market, strengthening regulations, and protecting consumers.

Punish

Cartel perpetrators must be punished strictly in order to create a deterrent effect and prevent the formation of cartels in the future. The punishment given to cartel perpetrators must be balanced with the losses suffered by consumers and the public.

Removing Cartels

Eliminating cartels can be done by strengthening competition in the market and strengthening regulations in certain industrial sectors. The government can also strengthen reporting and supervision of cartel practices, and develop educational programs for the public and business people about competition law.

Conclusion

Cartels are practices that harm consumers, workers, and society in general. The government must strictly enforce antitrust laws and take proactive measures to prevent the formation of cartels in the future. The community must also be actively involved in countering cartel practices by reporting suspicious practices and strengthening competition in the market.

FAQ

1. What is a cartel?

A cartel is a business practice that involves cooperation between several companies to control the price, production, and distribution of goods or services in the market.

2. Why do cartels harm consumers?

Cartels can cause the price of goods or services to become more expensive and the supply to be limited, making it difficult for consumers to get the goods or services they need.

3. What is the punishment for cartel perpetrators?

Cartel perpetrators can be subject to legal sanctions, such as large fines and even prison sentences. Companies involved in cartels can also be punished by not being able to participate in government tenders or contracts.

4. What are some examples of famous cartels?

Famous examples of cartels are the Organization of the Petroleum Exporting Countries (OPEC) and cartels of automakers in Japan in the 2000s.

5. How to prevent cartels from forming?

Governments can take proactive measures to prevent cartels from forming, such as increasing competition in the market, strengthening regulations, and protecting consumers. The government can also detect cartels by conducting careful market investigations and strengthening cooperation with antitrust agencies in other countries.

reference:

"Cartel: Getting to Know Evil Business Practices That Undermine Competition", Kompas.com, accessed on March 24, 2023 "The Importance of Cartel Eradication to Increase Business Competition", Indonesian Journal of Economics and Business, Vol. 37, No. 2, 2021. "Cartels and Their Impact on the Indonesian Economy", Scientific Journal of Business Economics and Entrepreneurship, Vol. 10, No. 1, 2022.