collusion

Collusion refers to secret or illegal cooperation between individuals or organizations to achieve an advantage that would be difficult or impossible to obtain individually. In economics and law, it commonly denotes agreements among competitors to coordinate behavior in ways that reduce competition, such as price fixing, bid rigging, market division, or output restrictions. Collusion can be explicit, involving a written or verbal agreement, or tacit, where competitors coordinate through signaling and parallel actions without an explicit pact.

Tacit collusion arises when firms in an oligopoly gradually align prices or capacities without explicit contact, often over time. In enforcement terms, collusion is generally illegal under competition or antitrust laws in many jurisdictions because it harms consumers and other competitors. Authorities such as the U.S. Federal Trade Commission, the Department of Justice, the European Commission, and other national agencies investigate suspected collusion, and perpetrators may face civil or criminal penalties including fines, disgorgement of profits, and prison for individuals.

Collusion occurs in various settings beyond markets, including sports, where match fixing or throwing games can be forms of collusion, and politics or diplomacy, where secret agreements with other actors are used to influence outcomes or behavior. In business governance, collusion can involve corrupt practices such as illicit coordination with suppliers or customers.

Distinctions should be made between collusion and conspiracy; while both involve secret wrongdoing, collusion emphasizes coordinated conduct to obtain an improper advantage, potentially without a formal plan. Not all secret cooperation is illegal or harmful; some agreements are lawful contracts that involve legitimate cooperation. The term is often used descriptively to indicate suspected or alleged improper coordination.