micro economics

a. Read the following news report and answer the questions that follows: MyCC proposes to fine seven warehouse operators for price-fixing By Fatimah Zainal, Thursday, 09 Jan 2020 4:18 PM KUALA LUMPUR: The Malaysia Competition Commission (MyCC) has issued a proposed decision to fine seven warehouse operators in Port Klang for being parties to an anti-competitive agreement. MyCC chief executive officer (CEO) Iskandar Ismail said they were provisionally found to have fixed the rates of surcharges on two services - long length handling and heavy lift handling - for all import and export cargoes in Northport and Westport areas in Port Klang. "In addition, MyCC also found through an online platform conversation, that most of the warehouse operators had implemented the price fixing rates upon their respective customers," Iskandar told a press conference at the MyCC office here on Thursday (Jan 9). Price-fixing infringes Section 4 of the Competition Act 2010, which stated that a horizontal or vertical agreement between enterprises is prohibited insofar as it has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services. The seven warehouse operators named were Regional Synergy (M) Son Bhd, WCS Warehousing Sdn Bhd, Pioneerpac Sdn Bhd, Interocean Warehousing Son Bhd, Intrexim Sdn Bhd, SAL Agencies Sdn Bhd and Prima Warehousing Son Bhd. "The seven parties served with the proposed decision were notified of the amount of the proposed fine. "They have 30 working days or about six weeks to submit a written or oral representation to state their defence," he said. However, as part of the competition watchdog's new policy starting 2020, the amount of the proposed fine will be undisclosed to the media as the final decision has yet to be made, said Iskandar. After MyCC has received the representation from the parties, only then will the commission determine the final decision, said Iskandar. MyCC is allowed under the law to impose a financial penalty of up to 10% of the worldwide turnover of each enterprise. "What we want to tell the public is that we will not stop looking for cartels. "They have the option to come to us, admit and ask for leniency and we can even give up to 100% discount on the fine if they cooperate in the investigations. "We will continue to fight cartel activities because it is equivalent to daylight robbery," added Iskandar. On an earlier case related to Grab, whereby MyCC had in Oct 2019 proposed an RM86.77mil fine on the c-hailing company for abusive transit practices, Iskandar said that the final decision is hoped to come out this year. "We have received their written representation on Dec 30 last year and are going through it diligently. "We are hoping that the final decision can be made this year," he said. In MyCC's proposed decision, it was alleged that Grab had abused its dominant position by imposing a number of restrictive clauses on its drivers that prevented them from promoting 11 and providing advertising services for Grab's competitors in the c-hailing and transit media advertising market. In the light of the above news report, answer the following questions. (i) In which of the four-market structures do you think the seven cargo warehouses are operating? Provide two reasons to support your answer. (3 marks) (ii) What is cartel? IIsing an appropriate diagram, explain how a cartel decides on output and price. (4 marks) (iii) Why do you think the MyCC official described cartel to be equivalent to 'a daylight robbery"? What would be the Islamic view on cartel? (4 marks) (iv) Discuss two potential scenarios in which this cartel could collapse. (2 marks)