A Cartel Was Once a Written Challenge to a Duel
A cartel is an agreement between rivals to limit competition. The word first meant a formal letter of challenge.
A cartel is an association of producers who agree to control prices or output. Its earlier meanings were quite different: a *cartel* was a written challenge to a duel, and then a written agreement between warring states for exchanging prisoners. The common thread is a formal written arrangement between opponents.
- A price-fixing association. *An oil cartel.*
- A criminal organisation. *A drug cartel.*
- A written agreement between enemies (historical). *A cartel for prisoner exchange.*
Word forms
| Form | Word | Example |
|---|---|---|
| Noun | cartel | A price cartel. |
| Plural | cartels | Rival cartels. |
| Related | monopoly | A near-monopoly. |
| Related | collusion | Illegal collusion. |
| Related | syndicate | A betting syndicate. |
How it is used in a sentence
- The regulator broke up the cartel.Competition law.
- OPEC is the best known example.An association of oil producers.
- Cartel behaviour is illegal in most markets.Price fixing.
How cartels operate
- Price fixing — agreeing what to charge
- Output limits — restricting supply to raise prices
- Market sharing — dividing territories between members
- Bid rigging — arranging who wins a tender
- Leniency programmes — regulators reward the first member to confess
From French *cartel*, from Italian *cartello*, a placard or written challenge, from *carta*, paper. The economic sense arrived through German in the nineteenth century.
Are cartels illegal?
In most countries price-fixing cartels are illegal. Agreements between states, such as OPEC, sit outside national competition law.
Why are cartels unstable?
Each member gains by quietly undercutting the others, so the agreement constantly tempts its own participants to break it.