Cartel Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Cartel, written in plain English, along with examples of how it is used.

What is Cartel?

(n) Cartel is the group of independent but symmetrical persons or business entity formed for the purpose of attaining unfair benefits using their collective strength to control the market activity. Eg. Pre-qualified bidders coming together to decide not to quote below certain rate.2. OPEC deciding to curtail oil production to increase the price.

History and Meaning of Cartel

Cartel is a term derived from the Italian word "cartello," which means "placard" or "poster." Cartels were originally formed in Europe in the 19th century when business owners would post placards outside their shops announcing an agreement to sell goods at a fixed price. Eventually, the term came to describe any group of businesses or organizations that come together to engage in anti-competitive behavior in order to control a market or product.

In the modern era, cartels are typically seen as illegal and anti-competitive. They can result in higher prices for consumers and impede the free market. Countries around the world have enacted laws to prevent and punish cartel behavior, including the United States' Sherman Antitrust Act.

Examples of Cartel

  1. OPEC is one of the world's most well-known cartels, controlling the production and price of oil and petroleum products.
  2. In 2019, the European Union fined four electronics manufacturers for forming a cartel to fix the price of electronic capacitors.
  3. The diamond industry has been accused of operating as a cartel by controlling the supply and pricing of diamonds.
  4. In the early 20th century, several major film studios formed a cartel that dominated the industry and controlled the distribution and exhibition of films.
  5. The NCAA has been accused of operating as a cartel by setting certain restrictions on student-athlete compensation.

Legal Terms Similar to Cartel

  1. Monopoly - When a single entity has complete control over a particular market or product.
  2. Trust - Similar to a cartel, a trust is a group of businesses or organizations that come together to control a market or product.
  3. Collusion - Refers to secret or illegal cooperation between individuals or companies to deceive or mislead others in order to gain an unfair advantage.