The terms "cartel" and "syndicate" are often used in the same context. However, they are not interchangeable.
Facts about the cartel
The cartel is one of the forms of monopolistic alliances of enterprises created on the basis of an intercorporate agreement. The subject of an appropriate agreement is the establishment of prices, terms of sales, sales, patent, personnel, management policies that are beneficial for the members of the association. At the same time, the members of the cartel retain economic and legal independence. The formation of the associations in question is usually carried out within the same market sector.
The attitude towards cartels among entrepreneurs is generally negative. However, the formation of appropriate associations can be welcomed by certain subjects of market relations, due to the fact that the cartel is one of the effective tools for establishing strategic control over the largest sectors of the economy.
Syndicate is a kind of cartel. It is formed through similar mechanisms - the conclusion of intercorporate agreements that determine certain business conditions that are beneficial for participants. It differs from the "classical" cartel in the narrower focus of the agreement concluded between businesses: it mainly fixes the conditions for sales and purchases.
In accordance with such agreements, the members of the syndicate undertake to pool the available resources for sales and purchases so that the economic costs of the respective activities are lower than those of other market players. Syndicates were very common in tsarist Russia, as well as in the USSR during the NEP years.
The main difference between a cartel and a syndicate is the goal of establishing the respective associations. "Classic" cartels are formed by enterprises seeking, first of all, to optimize the structure of costs and increase profits. Firms want to reduce competition in the market - but this activity is seen by the respective businesses as a means rather than an end.
Thus, the main factors in the formation of cartels are too high level of competition and low profitability of the business. As a result, many firms strive to change the business environment in their favor, reduce costs and increase profits.
In turn, the purpose of the formation of syndicates is, in fact, to conquer the market, increase the share of the relevant group of enterprises in a particular industry. It is the establishment of control over sales and purchases that is the key factor in the successful solution of such a task. It is precisely with this that we explain the priority of the conditions concerning the noted economic components in the agreements for the establishment of syndicates.
Thus, the main factor in creating syndicates is the interest of individual enterprises, industrial groups, large businesses, transnational corporations, in some cases - the state, in maintaining a leading position in a particular segment of the economy, in increasing market share.
So, we found out what is the difference between a cartel and a syndicate. Let's try to display the main criteria identified by us in the table.
|What's in between common?|
|Both are varieties of monopolistic associations, a syndicate is a subspecies of cartels|
|Participants retain legal and economic independence|
|How do the concepts differ?|
|The purpose of formation is to increase the profitability of a business by obtaining preferences at various prices, terms of sales, other economic processes||The purpose of formation is to maintain a market share and increase it due to creation, with the participation of other firms, of monopolistic preferences in key economic components of the business - sales and purchases|