A cartel is a group of enterprises that operate in a coordinated manner in the same market, with the objective of sales price fixing and/or quantity output fixing, in order to not compete, for instance, the OPEC (Organization of the Petroleum Exporting Countries). Cartels are particularly harmful to consumers and to the economy as a whole.

1. Ensayo Art. 02-09
“Cartels”: A Threat to Free Market
Por: Celina Escolán Suay
Superintendenta de Competencia
A cartel is a group of enterprises that operate in a coordinated manner in the same market, with the objective of sales price fixing
and/or quantity output fixing, in order to not compete, for instance, the OPEC (Organization of the Petroleum Exporting
Countries). Cartels are particularly harmful to consumers and to the economy as a whole. This type of entrepreneurial behavior
annuls the benefits of rivalry and competition amongst economic agents, precisely the factors that allow consumers to have
accessible prices, more variety, and best quality of the goods and services they receive. The participants of these anticompetitive
practices pursue to obtain and divide the profits which would, otherwise, be reduced as a consequence of competition.
Cartelization, known as explicit collusion, is considered a particularly severe infraction in different competition legislations around
the world. In El Salvador, this practice is prohibited by its legislation. In many countries, in addition to the imposition of onerous
fines, this practice is criminally penalized, such as Australia, Brazil, Canada, Korea, United States of America, England, and Japan,
amongst others.
In many countries, as well as in El Salvador, this conduct is considered anticompetitive per se, consequently, it is not necessary to
demonstrate, for instance, that price fixing has harmed third parties in order to sanction it. The definition of a per se infringement
considers that a price fixing agreement amongst competitors cannot have any positive effect
on the economy. The Competition Committee of the OECD (Organisation for Economic Co-operation and Development) carried
out, in 2002, a review of the cartel cases sanctioned by the member countries of said organization between 1996 and 2000, in order
to better understand the consequences of this type of conducts. A total of 119 cases were presented. Many of them determined the
total trade affected by the operation of the most important cartels. This exceeded 55 billion dollars. This review also revealed that
overprices resulting from these practices were significant and could reach 50%.
Competition legislations, as well as international organizations, agree that cartels are the main threat to a free market system.
Consequently, many countries, including El Salvador, have tools to detect them. According to international best practices, the
unannounced search with judicial warrant has demonstrated to be one of the most effective tools.
This type of practices has a highly harmful effect on consumer welfare and the market, and do not promote new investments. The
economy's competitiveness is affected when these practices take place in the market of industrial inputs, due to the fact that these
materials are used in the production of various final goods. These practices force entrepreneurs to use the material manufactured in
cartelized markets paying overprices that negatively affect their costs, as well as their possibilities to compete successfully. When
these practices take place in markets of massive consumption goods part of the family's basic grocery needs, consumers are
affected but especially the poorest ones, since these people spend a higher percentage of their income in this type of goods.
Concluding “cartel” necessarily implies the real or potential existence of an economic fraud, which can result in price fixing,
customer or market allocation, allocation of sales volume/restricting output, and also bid rigging, affecting markets and consumer
welfare.
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