Cartel vs. Collusion — What's the Difference?
Edited by Tayyaba Rehman — By Urooj Arif — Updated on March 15, 2024
A cartel is a formal agreement among competing firms to control prices or limit production, while collusion is a broader, secretive cooperation for deceitful or illegal purposes.
Difference Between Cartel and Collusion
Table of Contents
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Key Differences
A cartel involves companies within the same industry who agree to work together rather than compete, aiming to control prices and output to maximize their collective profit. Whereas collusion is a secretive agreement between firms or individuals, often going beyond formal business arrangements to include any deceitful collaboration that undermines competition or legal standards.
Cartels are typically established through explicit agreements that detail the coordination of production levels and pricing strategies among member companies. On the other hand, collusion can be more informal and may not involve written agreements, relying instead on implicit understandings to limit competition or manipulate market conditions.
While cartels are often illegal in many jurisdictions due to their potential to restrict competition and harm consumers, the concept of collusion encompasses a wider range of activities, not all of which are related to market competition. Collusion can occur in any context where individuals or entities secretly cooperate to deceive or commit fraud.
Cartels are usually found in industries with a small number of firms, as it's easier to coordinate actions among fewer participants. Meanwhile, collusion can occur in any context, including within and between industries, in sports, politics, and other areas where unfair advantage or deception is sought.
The enforcement against cartels typically involves antitrust or competition law, focusing on dismantling agreements that control prices or production. Collusion, while also subject to legal scrutiny, might be prosecuted under a broader array of laws, depending on the nature of the deceitful cooperation, such as securities fraud or bribery laws.
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Comparison Chart
Definition
A formal agreement among competitors to control prices or limit production.
A broader cooperation for deceitful or illegal purposes.
Legality
Often illegal, specifically targeted by antitrust laws.
May involve various illegal activities, not limited to market competition.
Form
Usually involves explicit agreements or contracts.
Can be formal or informal, often without a written agreement.
Scope
Primarily focused on controlling market competition.
Can extend beyond market manipulation to any deceitful cooperation.
Enforcement
Typically subject to antitrust or competition law enforcement.
Subject to a wide range of laws, depending on the activity.
Compare with Definitions
Cartel
A group of firms agreeing to control prices.
OPEC coordinates oil production levels to influence global oil prices.
Collusion
Secret cooperation for a deceitful purpose.
The executives were found guilty of collusion to embezzle company funds.
Cartel
Organizations combining efforts to dominate a market.
A cartel of coffee producers agreed to reduce exports to raise global prices.
Collusion
Informal conspiracy to undermine competition.
There was collusion among jury members to influence the trial's outcome.
Cartel
Cooperative strategies among competitors.
Auto manufacturers in a cartel agree on minimum selling prices.
Collusion
Illegal agreement between competitors.
Two companies colluded to fix the bidding process on a construction project.
Cartel
A formal arrangement to control supply.
The diamond cartel controls the supply to keep prices high.
Collusion
Covert operations to secure unfair advantages.
Athletes colluded with officials to manipulate competition results.
Cartel
An alliance to limit market competition.
Several technology companies formed a cartel to set standard prices for their products.
Collusion
A partnership in fraud or deception.
The collusion between politicians and contractors led to overpriced public projects.
Cartel
A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals.
Collusion
Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusion is not always considered illegal.
Cartel
A combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members.
Collusion
An often secret action taken by two or more parties to achieve an illegal or improper purpose.
Cartel
An official agreement between governments at war, especially one concerning the exchange of prisoners.
Collusion
A secret agreement for an illegal purpose; conspiracy. Category:en:Corruption
Cartel
A group of parties, factions, or nations united in a common cause; a bloc.
Collusion
A secret agreement and cooperation for a fraudulent or deceitful purpose; a playing into each other's hands; deceit; fraud; cunning.
The foxe, maister of collusion.
That they [miracles] be done publicly, in the face of the world, that there may be no room to suspect artifice and collusion.
By the ignorance of the merchants or dishonesty of the weavers, or the collusion of both, the ware was bad and the price excessive.
Cartel
(economics) A group of businesses or nations that collude to limit competition within an industry or market.
Drug cartel
Car cartel
Collusion
An agreement between two or more persons to defraud a person of his rights, by the forms of law, or to obtain an object forbidden by law.
Cartel
A combination of political groups (notably parties) for common action.
Collusion
Secret agreement
Cartel
(historical) A written letter of defiance or challenge.
Collusion
Agreement on a secret plot
Cartel
An official agreement concerning the exchange of prisoners.
Cartel
A ship used to negotiate with an enemy in time of war, and to exchange prisoners.
Cartel
An agreement between belligerents for the exchange of prisoners.
Cartel
A letter of defiance or challenge; a challenge to single combat.
He is cowed at the very idea of a cartel.,
Cartel
To defy or challenge.
You shall cartel him.
Cartel
A consortium of independent organizations formed to limit competition by controlling the production and distribution of a product or service;
They set up the trust in the hope of gaining a monopoly
Common Curiosities
Are cartels legal?
Cartels are often illegal and targeted by antitrust laws, as they restrict competition and can harm consumers.
What is a cartel?
A cartel is an agreement among competing firms to control prices or limit production in an industry.
How does a cartel operate?
Cartels operate through formal agreements among firms to set prices, limit production, or control market shares.
What is an example of a cartel?
OPEC is a well-known example, where member countries agree on oil production levels to influence prices.
What does collusion mean?
Collusion refers to any secretive cooperation or agreement for a deceitful or illegal purpose.
Can collusion be legal?
While collusion typically implies illegal cooperation, the legality depends on the context and jurisdiction.
What differentiates a cartel from collusion?
A cartel is a specific type of collusion involving formal agreements to control market aspects, whereas collusion is broader and can include any secretive cooperation for illegal or deceitful purposes.
What is an example of collusion?
Two companies secretly agreeing to fix prices or divide a market are engaging in collusion.
What industries are more likely to have cartels?
Industries with fewer competitors and high barriers to entry, such as oil and gas, are more prone to cartel formation.
What are the consequences of being part of a cartel?
Consequences can include fines, legal action, and damage to reputation.
How does collusion affect consumers?
It can lead to higher prices, less choice, and lower quality products or services.
Can individuals engage in collusion?
Yes, individuals can collude, for example, in bid-rigging or manipulating sports competitions.
Why are cartels formed?
Cartels are formed to maximize collective profits by reducing competition, controlling prices, and manipulating supply.
What measures can prevent cartels and collusion?
Strict enforcement of antitrust laws, active market surveillance, and incentivizing whistleblowers can help prevent such practices.
How are cartels and collusion detected?
They are detected through investigations by regulatory bodies, whistleblower reports, or competitive analysis.
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Written by
Urooj ArifUrooj is a skilled content writer at Ask Difference, known for her exceptional ability to simplify complex topics into engaging and informative content. With a passion for research and a flair for clear, concise writing, she consistently delivers articles that resonate with our diverse audience.
Edited by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
