Cartels in business are a funny thing. Everyone says we should tighten up our rules to stop them from manipulating prices, but the only thing that really works is loosening the rules to bring in more competitors. Take the grandaddy of them all, the Organisation of Petroleum Exporting Countries. It was itself a response by Middle Eastern countries to a cartel of private oil companies that for many years had managed to keep prices at the pump up and prices at the well-head down. But then Libyan leader Muammar Gaddafi demonstrated that producing countries could stand up to Western consumers (one reason that they hate him so much in the United States) and the others jumped in to form Opec and send oil prices rocketing in the wake of the 1973 Yom Kippur War. By rights it should have been one of the most successful cartels ever formed. There is no international anti-trust law, nothing at all to prevent countries from getting together and rigging prices if they want for as long as they want. So if anti-trust law is all that stops cartels from operating, then oil prices right now would be at least US$100 a barrel and we would all be driving electric cars recharged on nuclear or hydro power. But while there is no international antitrust law there are also no international laws that prevent new producers from entering the business or that say countries cannot cheat on their cartel arrangements. And that's why oil prices last winter went as low as $9 a barrel. What skewered Opec was not the presence of a regulatory environment but the absence of one. Open a market wide to competition and you sound the death-knell of cartels in that market. We had another example closer to home last year in the collapse of an attempt by Malaysia and Thailand to rig rubber prices. They got greedy, others got in and the rubber cartel got destroyed. Granted it does not always work. The diamond cartel is still alive with its blandishments to consumers of a diamond is forever (smash one with a hammer and see how forever it is) or a diamond is a girl's best friend (try some pillow talk with one to see how much friendship you get). But it is hanging in there by its fingernails just now, complaining bitterly about the 'illegal' producers that threaten it. A few more diamond discoveries should do the trick. In fact the only time that a free market is not effective in destroying cartels is when one cannot operate. You don't want scores of different electricity and gas companies, for instance, digging up your street to lay pipelines. One will do and its monopoly then needs to be regulated. But this is not what we have in the six mobile-phone companies that the director-general of Telecommunications, Anthony Wong Sik-kei, now says colluded in raising their monthly rates at the same time this month. Did they collude? They deny it. However, it does not take formal meetings with agendas and minutes to produce collusion when you have six companies that think so alike that they can do it with a nod and a wink. And this is where the problem lies. Some of these six have foreign shareholders, but they are essentially all local companies in their thinking and methods of operation. In other jurisdictions where a free market operates you will find at least one big foreign competitor in the mobile-phone business, someone who approaches it differently, who perhaps treats it as a loss leader or has different ideas about where telecommunications is heading. The collusion was the result not of our having weak laws against price fixing but of having a regulatory environment that was too tight in the sense of licensing too narrow a group of mobile-phone operators. So look at yourself too when you ask why it happened, Mr Wong. It may be a good idea when you issue the next batch of mobile licences to open the market for them a good deal wider.