A cartel is a group of independent market participants who collude instead of competing with each other, agreeing to fix prices, limit output, or divide markets in order to increase their collective profits. Most jurisdictions treat cartel formation as anti-competitive and unlawful; the United States Sherman Act of 1890 was an early prohibition of price fixing, market sharing, and output restriction, and price fixing by private companies is now illegal under antitrust law in more than 140 countries. Governments detect and prosecute cartels chiefly through economic analysis and leniency programs, which reduce penalties for members who cooperate with investigators and expose their co-conspirators; such programs have measurably reduced cartel activity since being introduced in the United States in 1993.
Facts
Classification CodeIn the United States, cartel conduct is prosecuted under Section 1 of the Sherman Antitrust Act of 1890, which declares illegal every contract, combination or conspiracy in restraint of trade or commerce among the states or with foreign nations. 1 Typical PenaltyUnder Section 2 of the Sherman Act, a person found guilty of monopolizing or conspiring to monopolize trade commits a felony punishable by a fine of up to one hundred million dollars for a corporation or one million dollars for an individual, imprisonment for up to ten years, or both. 1 Elements of OffenseA cartel forms when independent market participants collaborate and deliberately avoid competing with each other, typically fixing prices, restricting output through low production quotas, or stockpiling, in order to raise profits and dominate a market. 1 Notable ExampleA well documented international cartel is OPEC, whose member states coordinate oil production levels to influence world oil prices. 1 Jurisdiction VariationCartel treatment has varied sharply by era and jurisdiction: before 1945 cartels were tolerated and even promoted as ordinary business practice in German-speaking Europe, whereas the United States had already made cartel conduct a felony under the 1890 Sherman Act, and after 1945 American-promoted market liberalism spread cartel bans to an increasing number of other countries. 1 Classification
Offense GradeSerious or Indictable Offense 1 Connections
Associated With
Source Cartel (Wikipedia)
Has Offense Grade
In the Other Atlases
Found In
Also in Geography Atlas: where this subject is found.
Also in Geography Atlas: where this subject is found.
Sources
1. Cartel (Wikipedia)
WikipediaLegislation and penalties section, Sherman Act Section 1 quote
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
Legislation and penalties section, Sherman Act Section 2 quote
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100 million if a corporation, or, if any other person, $1 million, or by imprisonment not exceeding ten years, or by both said punishments, in the discretion of the court.
Lead paragraph, first sentence
A cartel is a group of independent market participants who collaborate with each other and avoid competing with each other in order to improve their profits and dominate the market.
Lead paragraph, international examples sentence
Cartels can be organized on an international basis; examples of international cartels include the OPEC cartel to collude on oil production and the International Rubber Regulation Agreement to collude on rubber production.
Legislation and penalties section, post-1945 sentence
After 1945, American-promoted market liberalism led to a worldwide cartel ban, where cartels continue to be obstructed in an increasing number of countries and circumstances.
Associated With: White Collar Crime, Legislation and penalties section, competition law sentence
Because cartels are likely to have an impact on market positions, they are subjected to competition law, which is executed by governmental competition regulators.
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