In 2004, the ACCC successfully prosecuted a number of petrol sellers in a Victorian town for collusion. These petrol sellers advertised their prices on boards outside their petrol stations. When one of the sellers wanted to raise petrol prices in the town, they would increase the price on their own board and then ring the other sellers suggesting that they ‘go for a drive’.

a Why was it important for the cartel to have the petrol prices easily visible on boards outside their petrol stations?

b Should the government prevent this type of collusion by banning the advertising of petrol prices?

c What would be the costs and benefits of such a policy?

d More recently, some politicians have been concerned about banks telling their customers about plans to raise the interest rates on home loans. The politicians have argued that these statements allow the banks to signal rate increases to each other, helping them to collude and maintain higher interest rates. Do you think that banks should be banned from telling customers about planned interest rate changes? Why or why not?