In competition economics, what is a cartel formed by competing companies to control prices or market supply?

In competition economics, a cartel is an anticompetitive agreement among competing companies to control prices, output, markets, or customers.

Cartel members remain separate businesses but coordinate instead of competing fully. Common practices include fixing prices, dividing territories, rigging bids, limiting production, and sharing sensitive market information. These arrangements can raise prices and reduce consumer choice.

The word cartel comes through French and German from an Italian term related to a written agreement or placard. Modern competition laws in many jurisdictions treat cartel conduct as a serious violation because it directly undermines competition. Authorities may impose fines, prosecute individuals, seek damages, or offer leniency to the first participant that reports the arrangement.

A cartel differs from a merger: a merger combines companies into one ownership structure, while cartel participants remain independent. It also differs from a trade association, which can lawfully provide industry information or standards when it does not coordinate competitive decisions. The exact legal test varies by jurisdiction.