By Leandro Carvalho
At the end of the 19th century, some European countries (such as England, France and Germany) experienced an acceleration in industrialization and, consequently, a rise in the concentration of capital. After the Great Capitalist Depression, between 1880 and 1896, companies and industries began to concentrate capital and form large monopolies. In other words, with competition between companies, only the strongest ones prevailed and incorporated small companies, thus forming large industries.
With the formation of monopolies, competition between companies ceased to exist as fiercely as before. In place of the great competitions, groups of entrepreneurs began to appear, called cartels, trusts and holdings . These have effected a union of self-interest against consumers in order to increase their profits. Later, we will highlight the main characteristics of cartels, trusts and holdings .
The cartel it is the secret union of companies of the same line of business, which establish agreements among themselves to fix the same price for their products. By setting the same price between the products of different companies, they end up with competition among themselves, that is, who is harmed is the consumer, who loses the possibility of looking for the lowest price, because without competition between companies there is no Lowest price. In this way, the cartel is the standardization of prices of the same products in different companies. The company that refuses to participate in the cartel is sabotaged and its owners are threatened.
The trusts are associations of companies that emerged from the merger of several companies that already controlled most of the market. Therefore, trusts are formed when owners of competing companies become partners in a single large company. Thus, they start to control a large part of the consumer merchant, also reducing competition and the possibility of the consumer finding products with lower prices.
From the moment that great entrepreneurs, instead of setting up their own industries, start to buy shares of companies in the same line of business, holdings appear . In this way, entrepreneurs begin to control the shares of two or three competing companies that produce the same product. Therefore, if the same entrepreneur is the owner of three companies that produce disposable cups, competition does not exist, configuring itself as a scam.
Currently, in Brazil, the formation of cartels and trusts is prohibited by law, but some sectors still continue to form cartels to standardize the price of the same products, avoiding competition. The Brazilian government created an organ of the Ministry of Justice, the Administrative Council for Economic Defense, to prevent the formation of trusts. The holdings continue as an effective practice on the stock exchanges, which control the stock markets of companies.