What is a cartel?

In its simplest terms, a cartel is an agreement between businesses not to compete with each other. The agreement is usually secret, verbal and often informal.

Typically, cartel members may agree on:

• prices
• output levels
• discounts
• credit terms
• which customers they will supply
• which areas they will supply
• who should win a contract (bid rigging).

Each of the above types of agreement is prohibited by the Competition Act and Article 81 of the EC Treaty. In addition, the Enterprise Act makes it a criminal offence for individuals to dishonestly take part in certain specified cartels, essentially those that involve price fixing, market sharing, limitation of production or supply or bid rigging.

Cartels can occur in almost any industry and can involve goods or services at the manufacturing, distribution or retail level.

Some sectors are more susceptible to cartels than others because of the structure or the way in which they operate. For example, where:

• there are few competitors
• the products have similar characteristics, leaving little scope for competition on quality or service
• communication channels between competitors are already established
• the industry is suffering from excess capacity or there is general recession.

You can download more information on cartels and the OFT's powers of investigation and enforcement below:

Cartels and the Competition Act 1998 (pdf 106 kb)

Powers of investigation (pdf 96 kb)

Covert surveillance in cartel investigations (pdf 178 kb)

Covert human intelligence in cartel investigations (pdf 158 kb)

Leniency in cartel cases (pdf 106 kb) 

Interim policy - Leniency and no action (pdf 262 kb)

OFT's guidance as to the appropriate amount of a penalty (146 kb)

The cartel offence: guidance on the issue of no-action letters for individuals (125 kb) 

Powers for investigating criminal cartels (119 kb) 

International Competition Network anti-cartel enforcement template (350 kb)

Back to: Cartels