What is a cartel?

A cartel refers to an agreement among independent businesses, often competitors, to coordinate their activities in order to regulate supply, fix prices, allocate markets, or limit production. This practice is considered anti-competitive and illegal in many jurisdictions because it undermines the principles of free market competition. By joining together, these businesses can manipulate market conditions to their own advantage, often at the expense of consumers and the overall economy.

The significance of recognizing a cartel lies in understanding its impact on market dynamics—cartels can lead to increased prices, reduced availability of goods or services, and stifled innovation, as companies become less motivated to compete when their actions are governed by such agreements. This concept is crucial in the study of ethical procurement and supply chain management, as it highlights the importance of fair competition and the ethical implications of collaborative practices in business.

In contrast, the other options do not align with the definition of a cartel. A type of product offered for sale, a marketing strategy, and a body overseeing fair competition each represent distinct concepts rather than the coordinated activities of businesses aimed at manipulating market conditions. Understanding what constitutes a cartel helps reinforce the importance of ethical practices in procurement and supply.