CARTELLO. – The c. (or consortium) is an agreement among industrial firms in the same branch of production for the purpose of regulating the market. It differs from other forms of industrial coalition (merger, absorption by the largest enterprise in a given productive branch of part or all of the other enterprises in that branch) in that the enterprises that give rise to the latter lose their autonomy. The differentiation of the individual enterprises, which instead continues to subsist in the c., raises particular legal problems and is of considerable economic interest. The individual enterprises, for example, anticipating that the c. may disintegrate, continue to act, in whatever ways are possible, by competing within the c. itself in order to secure good positions for when competition on the market resumes. For this reason, and because of the imbalance among the productivity levels of the participating enterprises, which is accentuated by changes in demand, the c. is one of the most unstable forms of coalition. In sectors where the tendency toward coalition is also intensified for other reasons (integration of plants, specialization or standardization of production, etc.), it is destined to give way to other, more stable forms of coalition.
The legal organization of the c. can take the most varied forms: from a written agreement to the establishment of a commercial company, and even to open prices, a form in which there is no written agreement, the members merely transmitting periodically to a central office data concerning their economic activity. The management of the c. may be entrusted to one of the members or to a bank, or to a collective body of the enterprises, whose decisions may be taken by majority vote or may require unanimity. Only in the latter case do the weaker enterprises have a valid possibility of defending their positions within the c., which, moreover, the economic power of the larger enterprises may render rather unstable. In the other cases, the predominance of the stronger enterprises reinforces the tendency toward more complex forms of coalition.
C. may be classified according to various criteria. Different types of c. have been examined, distinguished according to the intensity of the agreements and the form of management. Another distinction may be based on the ways in which the c. achieves the purpose that characterizes it: stabilization of prices, division of sales territories, determination of the maximum quantities of production for each enterprise. Every distinction responds above all to a need for clarity of exposition, since in reality the phenomenon presents a complexity that theory must necessarily decompose into its individual elements. The same distinction between c. and the other forms of coalition that chiefly pursue other ends (integration, specialization, standardization of production—in a single word, greater efficiency of the enterprises) loses much of its importance if one considers that, in reality, coalitions seeking to act upon prices by limiting competition generally establish connections that serve the second order of purposes (thus the existence of a c. may encourage, among enterprises in a certain productive branch, agreements for the purchase of raw materials, the use of energy, and the establishment of common offices or departments; it may also encourage the practice of réclame and the tendency toward more complex forms of integration). Conversely, coalitions that enable an enterprise in a given economic branch to achieve greater efficiency and a larger scale strengthen the enterprise’s monopolistic power, producing in price formation phenomena analogous to those caused by price leadership, etc.
A distinction corresponding to a clear concrete differentiation is that between voluntary and compulsory c. In agriculture, for example, cooperation among producers to support prices and to purchase seeds, fertilizers, and productive instruments jointly was deemed necessary by many governments in order to overcome the condition of inferiority in which the sector in question had found itself as a result of industrial development. The consortium among agricultural producers was thus made compulsory in many cases.
C. began to establish themselves in America during the second half of the nineteenth century, favored by the severe depression that struck the American economy particularly hard around 1872. Great complexes thus arose, centralizing the production of petroleum, steel, coal, gas, and sugar. Financially powerful organizations, more or less connected with one another, ultimately came necessarily to control an ever broader sector of economic activity and to dominate political life. The attempt made in the United States, through the Sherman Act (1890), to prohibit cooperation among producers intended to influence prices was in vain. The tendency, which continued in other forms, eventually prevailed. C. also spread rapidly in Europe, especially in Germany.
Price formation in a market dominated by a single c. that accounts for a considerable share of total supply is similar to price formation under monopoly. Naturally, monopolistic power, which depends on the elasticity of demand and that of residual supply (that is, the supply of enterprises not belonging to the c. and of those that might enter the market), is weaker in the case of c. that do not control the entire supply and that do not achieve greater efficiency among their member enterprises through the forms of coordination mentioned above; in such a case, in fact, the non-member enterprises are able to offer effective competition to the c. The same tendency that leads to the establishment of the c. therefore drives toward more intensive connections among its member enterprises. When the c. disintegrates, a regime of oligopoly replaces a regime of imperfect monopoly: competition among the large enterprises that had previously belonged to the c. will probably take the form of an economic struggle that will lead to more intensive connections among the enterprises themselves or will end with the survival of a monopolistic enterprise.
Price formation in a market dominated by several c. (a highly plausible hypothesis if one considers, for example, a world market) is analogous to price formation under oligopoly. Here too, competition from enterprises that do not participate in the c. and potential competition weaken the power of the c. themselves. Monopolistic power is naturally greater in the case of compulsory consortia that control the entire supply and are not subject to potential competition.
One cannot but maintain, contrary to Pantaleoni’s opinion, that the spread of c. responds to needs in the development of the economic system that are anything but pathological. The moral judgment that must be given to the phenomenon is therefore evident. It raises new problems of economic policy, which should not oppose the tendency toward coalition among enterprises, but should create the conditions whereby this tendency, instead of aggravating the predominance of particular economic and political forces, may lead to greater possibilities for the development of the human person. State interventions designed to achieve this objective will take different forms depending on the economic power of the c., the possibility of ensuring—through indirect interventions—that its activity proceeds within the framework of the general directives of economic policy, and the usefulness that direct management of the c. may have for the purposes of a general coordination of economic activity. Catholic theology regards c. as not illicit when the means employed remain within the proper bounds of justice, because c. are capable of bringing several advantages, especially in the per-
in the perfection of the goods and in prices; but it demands that they be kept within due limits both in their implementation and in their supervision, because they easily provide occasion for bankruptcies, immoderate prices, and corruption.