What is a cartel?

The term refers to a formal or informal agreement between businesses whose concerted aim is to control a market or productivity by restricting competition. The participants, whose agreement may be written or verbal, may fix prices, rig bids, divide geographic territories, markets or customers among themselves or restrict production and supply. Canada’s Competition Act makes cartel behaviour a criminal offence. Bid-rigging in response to calls for tender is one such behaviour. It occurs when bidders, who are supposed to be working independently, agree in secret not to submit a bid or agree to submit bids that have been determined by mutual agreement to arrange the winner and the winning price. The Competition Bureau of Canada, which enforces the Competition Act, explains that cartels artificially raise prices, restrict choices or reduce product quality or service.