Cartels are, by their nature, clandestine. A cartel is an agreement between businesses not to compete with each other. The agreement is usually formal and enforced by the scale of the rewards and by bonds of trust (as opposed to the force of law!) The average cartel duration is six years and the estimated additional cost to buyers is 10%(OECD). How can you tell when a cartel is in force?

Cartels act in the interests of their members to control, amongst other things:
• Prices and discounts: a price fixing cartel
• Customers supplied or markets entered: a market sharing cartel

There are some market characteristics which make cartels more likely than others:
• There are a few dominant players
• The product or service offerings are similar...leaving little scope for differentiation
• The players have open communication channels such as trade bodies or associations
• The industry is suffering from depressed margins, excess capacity or general recession

The presence or absence of the factors above does not imply or deny that there is a cartel operating! However, here are some triggers that might make you commission further research:
• Prices rise in unison, perhaps with a common script or "explanation"
• Price rises unrelated to changes in factor costs, but suggest "follow-my-leader" pricing.
• The selective participation of bidders in some markets but not in others with no rationale.
• Non-return of bids by some players in a bid cycle
• Marked changes in competitiveness so that previously competitive bidders bid at a premium.
• Bid rotation where all the bidders seem to win business based upon when it is their "turn".
• Bids exceed internally generated cost estimates and there is no robust explanation.
• Incumbent contractors don't bid or bid at a premium to current rates
• The same firm wins every bid cycle.
• The difference between the winning bid and the next bid is in round numbers of per cent.
• The difference between the winning bid and the next bid is suspiciously high.
• A new entrant to the bid list enters with a large discount to the bids of others.

Don't be wise after the event! Know your market!