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Cartels: A Comprehensive Guide to Their Legal Definition and Function
Definition & Meaning
A cartel is a group of independent companies that come together to coordinate their actions in the market. Their primary goal is to limit competition and maximize profits by controlling prices, reducing output, or managing distribution. While cartels are often associated with legal industries, many operate in secrecy, such as illegal drug cartels. Cartels are more common outside the United States due to strict antitrust laws that prohibit such practices within the country.
Table of content
Legal Use & context
Cartels are relevant in various legal contexts, particularly in antitrust law. This area of law seeks to promote fair competition and prevent monopolistic practices. In the U.S., antitrust laws, such as the Sherman Act, prohibit the formation of cartels and impose penalties for companies that engage in such agreements. Users may encounter legal forms related to antitrust claims or investigations, which can be managed with templates from US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
One well-known example of a cartel is OPEC (Organization of Petroleum Exporting Countries), which regulates oil production among its member countries to influence global oil prices. Another example is the formation of a hypothetical cartel among several pharmaceutical companies that agree to set high prices for a specific medication to maximize their profits.
Relevant laws & statutes
The primary legal framework governing cartels in the United States is the Sherman Antitrust Act of 1890. This act makes it illegal to restrain trade or commerce through collusive agreements. Other relevant laws include the Clayton Act and the Federal Trade Commission Act, which further address anti-competitive practices.
Comparison with related terms
Term
Definition
Key Differences
Cartel
A group of companies coordinating to limit competition.
Focuses on price control and market manipulation.
Monopoly
A single company dominating a market with no competition.
Involves one entity rather than a group agreement.
Trust
A combination of firms to manage competition and prices.
Similar to cartels but often involves more formal arrangements.
Common misunderstandings
What to do if this term applies to you
If you suspect that a cartel may be affecting your business or market, consider consulting with a legal professional who specializes in antitrust law. You can also explore US Legal Forms for templates related to antitrust claims, which may help you understand your rights and options.
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