Close this search box.

Table of Contents



Collusion in finance refers to an unethical and illegal agreement between two or more parties to limit open competition by deceiving, misleading, or defrauding others of their legal rights. This strategy is typically used to manipulate and control market prices or deceive investors. This malpractice can lead to theft, fraud, or legal penalties when detected.


The phonetic transcription of the word “Collusion” is /kəˈluːʒən/.

Key Takeaways

  1. Secret Agreement: One of the primary aspects of collusion is that it involves a secret agreement between two or more parties, often with the intention of deceiving or defrauding others. This may occur between companies, political entities, or individuals and is generally considered illegal.
  2. Anti-Competitive Behavior: In an economic context, collusion frequently refers to a scenario where businesses conspire to fix prices, manipulate markets, or otherwise stifle competition. This behaviour can lead to higher prices and less choice for consumers, thus violating anti-trust laws.
  3. Punishment and Legal Consequences: Collusion is heavily punished under law due to its illegal nature and its potential to cause harm to individuals, competitors, and the economy as a whole. Penalties may include hefty fines, imprisonment, and severe damage to reputation.


Collusion is a crucial term in business/finance because it refers to an unethical and illegal practice in which two or more competitors make secret agreements to manipulate competition, such as fixing prices or dividing markets. These actions distort market forces, lead to higher prices, reduce product quality, and violate both competition law and free-market principles. Collusion can have detrimental effects on consumer welfare, economic efficiency, and market fairness. Therefore, it’s essential for regulatory bodies and businesses to understand and be vigilant against such practices to maintain a healthy, competitive business environment.


Collusion, in the realm of finance and business, refers to a secret or unlawful agreement between firms, often competitors, to deceive, mislead, or defraud others, particularly consumers, of their rights, or to obtain an unfair market advantage. The primary purpose of such actions is almost always financial gain. By coordinating their efforts, these firms can manipulate market conditions to their benefit, often at the expense of others. Collusion often involves practices like price-fixing, bid-rigging, or market allocation, which undermine the notion of fair competition and may lead to increased prices or reduced product quality for consumers.The manipulative tactics employed by colluding parties have powerful implications. For instance, in a scenario of price-fixing, firms collectively decide on a price to be maintained within the market, eliminating the natural market forces of supply and demand which typically help regulate pricing. Meanwhile, in bid-rigging, competing firms pre-arrange who will win a bid, thereby obstructing the open competition that ought to occur. These activities serve the primary purpose of increasing the colluding firms’ profits while customers face the brunt of these unfair practices. Therefore, many countries have strict laws and heavy penalties established to deter businesses from engaging in these type of economic collusion.


1. Price Fixing in The Airline Industry: In 2019, British Airways was fined £183 million by the Information Commissioner’s Office for a data breach that affected about half a million of its customers. While this is not a direct example of collusion, between 2004 and 2006, British Airways was involved in a price-fixing scandal alongside Virgin Atlantic. Both airlines had colluded to raise fuel surcharge prices. Virgin Atlantic blew the whistle on the collusion, avoiding fines, but British Airways was fined £121.5m by the Office of Fair Trading and the U.S. Department of Justice.2. The Libor Scandal: In 2012, major banks such as Barclays, Deutsche Bank and UBS were fined billions of dollars for colluding to manipulate the London Interbank Offered Rate (Libor), a key interest rate that underpins trillions of dollars in global transactions. Traders at these banks communicated via email and instant messages to manipulate the rates to their favor, showing a clear case of collusion.3. Tech Industry Wage Collusion: In 2015, Apple, Google, Intel and Adobe systems agreed to a $415 million settlement over a lawsuit accusing them of colluding to avoid poaching each other’s employees thereby keeping wages lower. The antitrust lawsuit was filed by employees of these companies suggesting that the collusion impacted their salaries and job mobility.

Frequently Asked Questions(FAQ)

What does collusion in business term mean?

Collusion refers to a secret or illegal cooperation or conspiracy with the goal of deceiving others, often in a business context to manipulate market prices or engage in fraudulent activity.

Is collusion always illegal?

Not always, but in most contexts related to business practices, like price-fixing, bid-rigging, or dividing markets, collusion is considered illegal due to its anti-competitive nature.

Can you provide an example of collusion?

Yes, a common example is when multiple businesses that sell the same product secretly agree to keep their prices high, reducing competition and leading to increased prices for consumers. This practice, known as price-fixing, hurts consumers and violates antitrust laws.

How is collusion detected in the business world?

Detecting collusion can be challenging, but regulators and investigators often look for signs such as parallel pricing, shared geographical territories among companies, abnormal profits, and unusual bidding patterns in auctions.

What are the consequences of collusion?

If proven and convicted, colluding companies can face severe financial penalties, possible dissolution, and those individuals involved can face fines or even imprisonment.

What actions can be taken to prevent collusion?

Increasing competition, implementing strong antitrust laws, encouraging whistleblowing, and effective monitoring of market trends can work as preventive measures against collusion.

Does collusion only occur among large corporations?

No, collusion can occur in corporations of any size, and among individuals as well. The size of the company doesn’t determine the probability of collusion.

Can collusion have any positive effects on the market?

While some argue that collusion can lead to better product quality or increased market stability, the overall consensus is that these potential benefits do not outweigh the negative impacts, such as higher prices, decreased innovation, and economic inefficiencies.

Related Finance Terms

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More