A consortium of independent organisations formed to limit competition by controlling the production and distribution of a product or service.
In UK law, a cartel refers to an agreement or arrangement between two or more businesses to restrict competition and manipulate market conditions. Cartels are considered illegal under the Competition Act 1998 and the Enterprise Act 2002. The legislation aims to promote fair competition and protect consumers’ interests by preventing anti-competitive practices. Cartels typically involve price-fixing, market sharing, bid-rigging, or limiting production or supply. Engaging in cartel activities can result in severe penalties, including fines, imprisonment, and director disqualification. The Competition and Markets Authority (CMA) is responsible for investigating and prosecuting cartel cases in the UK. The CMA actively encourages individuals and businesses to report any suspected cartel behaviour to help maintain a competitive market environment.
n. 1) an arrangement among supposedly independent corporations or national monopolies in the same industrial or resource development field organised to control distribution, set prices, reduce competition, and sometimes share technical expertise. Often, the participants are multinational corporations that operate across numerous borders, have little or no loyalty to any home country, and have great loyalty to profits. The most prominent cartel is OPEC (Organisation of Petroleum Exporting Countries), which represents all of the oil-producing countries in the Middle East, North Africa, and Venezuela. Many cartels operate behind a veil of secrecy, particularly since under American antitrust laws (the Sherman and Clayton Acts), they are illegal. 2) a criminal syndicate like the international drug cartel headquartered in Colombia.
- A group of businesses or nations that collude to limit competition within an industry or market.
- A combination of political groups (notably parties) for common action.
- A written letter of defiance or challenge.
A cartel is an illegal agreement or arrangement between competing businesses or individuals to control prices, limit competition, and allocate markets. It involves collusion among the members to manipulate the market in their favour, often resulting in higher prices for consumers and reduced choices. Cartels are typically formed in industries with limited competition and high barriers to entry. They are considered a violation of antitrust laws and are subject to severe penalties and fines.
A cartel is a formal agreement between firms engaged in the production and sale of the same product in order to exact and share monopolistic rents. Usually involving a small number of sellers, the terms of the agreement may include points like total industry output, price-fixing, allocation of territories, allocation of customers, market shares, bid-rigging, division of profits, and setting up of common sales agencies.
The chief objective of a cartel is to maximise the benefits of the sellers. Reduction in competition and fixation of prices help earn more profits for individual members involved in the agreement. However, cartels are forbidden in certain countries, including the USA, because of the competition laws that have been implemented there.
A cartel is an agreement between competing businesses or individuals to control prices, limit competition, and allocate markets or customers among themselves.
No, cartels are illegal in most jurisdictions, including the United States and the European Union. They are considered anti-competitive practices that harm consumers and violate antitrust laws.
Participating in a cartel can lead to severe legal consequences, including hefty fines, imprisonment, and reputational damage. Companies involved may also face civil lawsuits from affected parties seeking damages.
Cartels are often detected through whistle-blowers, leniency programs, or market monitoring by competition authorities. Once detected, competition authorities conduct investigations, which may involve gathering evidence, conducting interviews, and analysing market data.
Yes, individuals involved in cartel activities can be held personally liable for their actions. This includes executives, managers, and employees who actively participate in or facilitate cartel behaviour.
Competition authorities, such as the Federal Trade Commission (FTC) in the United States or the European Commission in the European Union, play a crucial role in detecting, investigating, and prosecuting cartels. They enforce antitrust laws and impose penalties on cartel participants.
Cartels can harm consumers by artificially inflating prices, reducing product choices, and stifling innovation. Consumers may end up paying higher prices for goods or services due to the lack of competition.
Yes, international cartels can be prosecuted if they have an impact on multiple jurisdictions. Competition authorities often cooperate with each other through mutual legal assistance agreements to investigate and prosecute cross-border cartels.
Individuals or businesses can report suspected cartel activities to the relevant competition authority in their jurisdiction. Many authorities have dedicated hotlines or online reporting systems to encourage whistle-blowers to come forward with information.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 11th April, 2024.
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