Article 101(1) TFEU prohibits all agreements and concerted practices between undertakings which have as their object the prevention, distortion or restriction of competition within the internal market. The cartel prohibition is a central point of EU competition law which aims at protecting the internal market from any form of collusion between independent undertakings.
Profits from collusion
Although the significance of antitrust law both in the EU and in other jurisdictions around the world has significantly increased in recent years, it is assumed that national and cross-border cartels are still attractive. The main reason for the undertakings to enter into prohibited agreements with their competitors is higher profits that may be gained from the implemented collusion practices. The coordination of market conduct may bring higher profits than competition. Collusive practices allow the undertakings concerned to exercise market power that they would not otherwise have. For example, through coordinated behaviour market and/or customer allocation may become possible which enables the firms participating in the cartel to request from their purchasers and final consumers prices above the market level, thereby increasing their own profits. Another potential benefit from cartel participation is lower costs. Cartels help to preserve the market status quo and to avoid investments in innovative assets and R&D that would be required in the presence of competition pressure.