Which of the following is not true of covert collusion?
Select one:
A. Numerous examples of it have been found in the United States.
B. It occurs when formal cartels are not legal.
C. No case of it has been proven in the United States.
D. It has been historically referred to as "gentlemen's agreements."
Correct option is C. No case of it has been proven in the United States.
Covert collusion takes place in United states because cartels are illegal in US. Firms fixes prices on the basis of their verbal understandings with each other. Historically, these understandings were referred to as "gentlemen's agreements." We can find numerous examples of it in the United States
In 1950's various leading electrical firms like Westinghouse, General Electric, etc made a conspiracy to fix the prices of electrical transformers & other equipment. In this case, in the year 1961, US Supreme court found 7 officials who were serving at high ranks guilty of illegal price fixing & market sharing agreements. These officials have to pay fines as well got short jail sentences for forming the covert collusion.
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