A cartel is defined as a group of individuals or businesses in the same industry that work together for the common advantage of each party involved. A cartel results in increased prices, a specific amount of a product, and limits competitors in the market.
In approximately 150 countries, including the United States, it is illegal for businesses to form a cartel. This is due to antitrust laws, which ensure that the nation's economy has healthy competition, variable pricing of products, and fair trade. In the United States, the first antitrust law, also known as the Sherman Act, was established in 1890. The Sherman Act was established to prevent businesses from monopolizing an industry.
The United States revisited antitrust laws in 1914 and established the Federal Trade Commission Act and the Clayton Act. The Federal Trade Commission Act was established to ensure that fair competition exists in each industry, outlawing the formation of or participation in cartels. The Clayton Act prohibits any mergers or acquisitions that would significantly hinder competition in any industry.
However, some countries allow cartels to form. A cartel can be thought of as an alliance among different countries in order to control a certain product of industry. For example, the Organization of the Petroleum Exporting Countries (OPEC) is an alliance of thirteen countries, including Saudi Arabia, Venezuela, Nigeria, Libya, Kuwait, United Arab Emirates, Gabon, Equatorial Guinea, Congo, Angola, Iran, Iraq, and Algeria. The OPEC was founded by Saudi Arabia and Venezuela with an intent to control the petroleum industry worldwide, limit competition in the industry, and ensure that all members of the OPEC receive a significant return on investment.