Prior to 1988 there existed a Prices Surveillance Authority (PSA) endorsed maximum wholesale price for petrol. Retailers (service stations) were able to negotiate discounts from this price depending on their relative bargaining power. In addition, an owner dealer operating a service station and selling large volumes of petrol was often able to negotiate a permanent discount of say three cents per litre off the retail price from supplier A, simply by threatening to buy petrol from another supplier, say supplier B. At the time, an independent operator like Solo was able to get even larger discounts, and pass them on, by operating on the basis of high volume low service and low retail prices.
In 1988 the oil companies introduced their system of rack pricing. Such a system soon eliminated what was possible before its introduction. In reality rack pricing is a discipline where petrol suppliers list their prices publicly. Effectively, petrol companies tell each other what price they are charging their outlets. The discipline is maintained so long as no oil company undercuts the other.
"Apart from the effect of public disclosure on independents ability to bargain, petrol prices have also tended to rise because the major oil companies have been aligning their rack prices at the maximum wholesale price set by the PSA. Doing this increases both wholesale and retail profit margins. The ACTU has calculated that this increase in wholesale margins involves a $600 million transfer of income from petrol consumers to the oil companies." [From an AGE report 28/08/1990]
As regards international calls, 3 cartels exist. One in Geneva, the International Telegraph and Telephone Consultative Committee (CCITT) has always blocked development of international private circuits that could compete against them. A 2nd is Intelstat, to which we have given the right to vet the launching of all or any new communications satellites. The third cartel is the accounting rate system.
The rates system is described thus: The country that makes the overseas call collects the costs (and profit). The countries that receive the call naturally wish to be compensated. Checked by CCITT and reviewed between telephone companies, this system divides the overseas phone call charges. This is why phone call charges vary so wildly between nations.
In 1980 the US decided to break up this cartel and hence the global move since, toward telecommunications deregulation. Some sources suggest the three cartels are overcharging telephone users some 10 billion dollars world wide.
In Australia, if the ratio of outgoing calls to incoming calls was, say, 6 to 1 it means money flows out of Australia to other countries. With such a ratio the outflow of money would be enormous. This monopoly inflates the price of telecommunications. [Sourced from Asiaweek]
Land price is the enemy of free markets.