In the study of the economy and competition in the market, collusion takes place within a sector when competing companies cooperate for their mutual benefit. Agreements often take place within an oligopolistic market structure where there are few companies and where agreements have a significant impact on the overall market or on the sector as a whole. Collusive agreements between the parties need not be explicit in distinguishing an agreement; However, the effects of cartels and collusion are the same.  In the UNITED KINGDOM, the COMPETITION ACT 1998 completely prohibits agreements in the form of an anti-competitive agreement/restrictive trade agreement. Previously, the Restrictive Business Practices Act allowed for the continuation of such agreements, with a “net economic benefit”.  These may be “unions, wage agreements, bribes or misrepresentation of the independence of the relationship between the conspiring parties.”  From a legal point of view, all acts committed by collusion are considered null and void.  Several factors can cause problems in the context of a collusion agreement between suppliers: collusion in a market or sector is easier to obtain if: cartels can also occur in auction markets where independent companies coordinate their bids (Bid Rigging).  Economists and managers have attempted to identify factors that explain why certain companies are more or less likely to be involved in collusion. Some highlighted the role of the regulatory environment and the existence of leniency programs. Because of their general negative effects on market efficiency (cushioning inefficient and expensive suppliers) and by depriving buyers of the benefits of competition (including lower prices), competition policy, as in the United Kingdom, directly prohibits cartels under the COMPETITION ACT 1998. Cartels are illegal in the US, Canada and most of the EU under antitrust laws, but implicit agreements in the form of price leadership and tacit agreements are still ongoing.
Several examples of collusion in the United States are as follows: horizontal cartels involve price cartels/market manipulations between companies in the same sector and at the same stage of production Most cartels encounter difficulties and tensions, and some cartels collapse completely. Assessment: Fear of fines or other controls means that there is a strong incentive to conceal cartels When this happens, existing companies participate in price cartels. This behaviour is considered illegal under UK and EU competition law. But it can be difficult and complex to prove that a group of companies voluntarily united to raise prices.