Which of the following best describes a cartel?

A cartel is best described as an illegal price-fixing arrangement. This occurs when competing firms in an industry collaborate to control prices and limit competition, rather than competing against each other. By doing so, they aim to increase their market power and maintain higher prices than what would exist in a competitive market. Such agreements are typically secretive and designed to manipulate market dynamics, which is why they are deemed illegal in many jurisdictions. This collusion can lead to negative consequences for consumers, as it undermines the benefits of competition, such as lower prices and better quality products.

The nature of a cartel directly contrasts with legal agreements meant to promote fair competition among businesses, which are designed to benefit consumers and encourage innovation. Hence, the identification of a cartel as an illegal practice is essential to understanding its impact on market structures and the legal framework governing business operations.