Question

According to an investigation by the Competition Commission of Singapore (CCS) , 11 air freight forwarding companies and their Singapore subsidiaries and affiliates were involved in a cartel. They colluded to fix certain fees and surcharges ,and also exchanged price information and customer details in relation to the provision of air freight forwarding services for shipments from Japan to Singapore.

A. What could have been the factors contributing to them forming the cartel and the cartel's success?

B. Why might the cartel have broken up even without the intervention of the CCS?

Answer 1

The cartel might have been formed to earn higher profits, reduce losses and uncertainty etc etc.. The cartel was successful because various firms forming the cartel stuck to the agreement because they thought it led to above mention results

2 often in a cartel firms are misled by their intention to earn more profits and thus they don't stuck to agreements. They often increase output and reduce prices. When other firms come to know about this, they retaliate. In this way cartel would have broken up with intervention