A cartel is the most serious form of distortion of market competition. By definition, it is an agreement between entrepreneurs who are competitors on the market.
The term prohibited agreement in competition law most often refers to cartels or cartel agreements.
By definition, a cartel is an agreement between entrepreneurs who are competitors on the market. Such an agreement between entrepreneurs operating in the same area of production or distribution (therefore also called a prohibited horizontal agreement) can be formal (for example, a contract) but also a secret agreement, a single contractual provision, or joint action, the purpose of which is to exclude market competition between the participants of such agreements with the aim of making additional profit by increasing prices. For this reason, cartels represent the most serious form of violation of the regulations on the protection of market competition.
Cartel members act as an association, and most often agree on prices, share markets or assign customers or locations where they will sell their products or services, agree on rebates, define the scope of production and the entire activity they engage in, agree on their behavior and conditions that will set up in public procurement procedures, share profits, close the market to new competitors or combine the above. By doing so, they limit or completely abolish market competition in the most difficult way because they define the rules in the business they are engaged in, close the market to new competitors and directly harm consumers who pay even up to 25 percent higher price of products or services than the one that would have been agreed between entrepreneurs there is none.
In addition, they limit consumers’ price and quality choices, while they themselves, since they do not compete with each other, do not invest in innovations and do not create new value. Competition law considers them to be the source of the greatest and most far-reaching consequences for consumers, market competition and the economy as a whole, prohibits them and foresees the strictest fines for their participants.