MICROECONOMICS - ACCP 5002

ASSIGNMENT 3

Assignment Goal(s)
 Demonstrate research skills and understanding of collusion
 Identity industry types

Research

There have been a few instances of collusion in Canada in the last several years.
You will do some brief research on one of them and briefly report your
findings. You will explain what happened and when, who the participants
were, and what the consequences were. Explain how the situation has been
(or is being) resolved. Be sure to properly site your sources including in-text
citations when required. The collusion you will investigate depends on the first
letter of your first name as listed in the table below. This should be a maximum
of one page! (20 marks)
First letter of last name Collusion case
A-E Ice
F-L Chocolate
M-R Bread
S-Z Gasoline
 A case of collusion in Canada: Gas price-fixing in Quebec
In Canada, collusion is illegal and there was a case of gasoline price-fixing
collusion happening in Quebec, Canada, in 2008. According to the Competition Bureau
Canada, the participants who involved in this collusion are 33 individuals and eight
companies who fixed retail gasoline prices in four Quebec markets. They have pleaded or
were found guilty with fines totaling over $4 million. In addition, six individuals by far
have been sentenced to terms of imprisonment with totaling of 54 months. (Source:
Competition Bureau Canada, 2017, Irving pleads guilty in Quebec gasoline cartel case,
www.canada.ca/en/competitionbureau/news/2017/11/irving_pleads_guiltyinquebecgasoli
necartelcase.html. Accessed 10 December 2018).
The gasoline collusion case first started in 2008, when the federal Competition
Bureau investigated and laid criminal charges against 13 individuals and 11 companies
over allegations that they fixed retail gasoline prices in four Quebec markets, namely
Thetford Mines, Victoriaville, Magog and Sherbrooke.
The companies which were pleaded guilty were Les Pétroles Therrien Inc.,
operating under the Petro-T banner, Distributions Pétrolières Therrien Inc. and Ultramar
Ltée. (Source: Bertrand Marotte, 2008, Gas price-fixing charges laid in Quebec,
www.theglobeandmail.com/report-on-business/gas-price-fixing-charges-laid-in-
quebec/article18451897/. Accessed 10 December 2018).
In 2009, the firm of Philippe Gosselin & Associés Limitée was the fourth
company to plead guilty and was fined $600,000, and Carol Lehoux, a senior executive
of Philippe Gosselin et Associés Limitée, and André Bilodeau, a former representative of
Philippe Gosselin et Associés Limitée were each sentenced to 10 months in jail, as well
as 75 hours of community service for their involvement in the conspiracy ( source:
Competition Bureau Canada, 2009, Archived — More guilty pleas in Quebec gasoline
cartel case, www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03024.html Accessed 10
December 2018).

In April, 2015, according to Competition Bureau, Les Pétroles Global Inc. had
been fined $1 million by the Quebec Superior Court in Sherbrooke for its role in fixing
the price of retail gasoline in Victoriaville, Sherbrooke and Magog, Quebec. (Source:
Competition Bureau Canada, 2015, Les Pétroles Global Inc. fined $1 million for gasoline
price-fixing in Quebec, www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03908.html
Accessed 10 December 2018)
The latest update news regarding this case is in November 2017 as Irving Oil
Limited pleaded guilty to one count of retail price maintenance in the gasoline industry in
Thetford Mines and Sherbrooke in Quebec, and it has to pay a fine of $287,583. (Source:
Competition Bureau Canada, 2017, Irving pleads guilty in Quebec gasoline cartel case,
www.canada.ca/en/competition-
bureau/news/2017/11/irving_pleads_guiltyinquebecgasolinecartelcase.html Accessed 10
December 2018)
Question
Identify the market structure (Perfect Competition, Monopoly, Monopolistic
Competition, Oligopoly) that each of these industries is. Justify your choice. (20 marks)
Industry Market Justification
Structure
Airlines within There are a small number of Airline
Canada Oligopoly companies within Canada and Air Canada
controls mainly the market. The barrier to
enter the market is also high.
Wheat in Canada There are many firms selling Wheat and
Perfect there is no different in the quality of the
Competition product. Each seller of wheat has limited
control over the price because many other
sellers are offering wheat that is essentially
identical. Both buyers and sellers are price
takers because they have to accept the price
that the market determines.
Real estate agents Perfect The market structure is perfect competition
in Toronto competition because there are a number of real estate
agents in Toronto which offer identical
services. Both buyers and sellers are price
takers.
Recreational There are a limited number of sellers because
Cannabis in Ontario Oligopoly recreational cannabis in Ontario is regulated
by the government. For example, those who
want to sell recreational cannabis have to
apply for licensing and have permission to
sell. In addition, sellers also sell the same
type of recreational cannabis, the product
they are selling is similar.
Shoe stores at the The market structure is a perfect competition
local mall Perfect because there are a number of shoe stores at
Competition the local mall which may sell the same brand
name shoes.
Unopened bottles of The market structure is oligopoly because
liquor (40% Oligopoly there are a limited number of sellers. Those
alcohol) to take who want to sell have to apply and obtain
home in Ontario permission from Alcohol and Gaming
Commission of Ontario (AGCO)
Corn in Ontario There are many sellers and buyers in the
Perfect market and the product is identical. Both
Competition buyers and sellers are price takers.

Mobile phone There are only a small number of mobile

service providers in Oligopoly phone service providers in Canada which
Canada dominate the market structure. Therefore,
there is a limited competition in mobile
phone service providers in Canada.

Colleges in the
greater Toronto Oligopoly There are a small number of colleges in the
Area greater Toronto Area which offer similar
courses and programs. Therefore, the type of
the market is oligopoly.
Restaurants in There are a large number of restaurants in
Toronto Perfect Toronto which may sell the same types of
competition foods but are located in different places. The
products are not identical and they can free
enter or exit the market.

 You must reference your external sources.

 This assignment can be done alone or in groups of up to two students
 Assignment is due BEFORE (B4) the start of class on December 12.
 You may submit online or in hard copy, your choice.
 Include your name(s) and your student number(s) on the assignment.