Illegal agreement among firms to divide the market is a common practice that violates antitrust laws. It occurs when two or more firms agree to divide the market by allocating customers, territories, or products. This practice is illegal because it eliminates competition, raises prices, and restricts consumer choice.

An illegal agreement to divide the market is also known as collusion. It often involves companies in the same industry agreeing to limit competition. Examples of collusion include bid-rigging, price-fixing, and market allocation.

Bid-rigging occurs when two or more companies agree to submit artificially high bids for a contract or project. The companies agree beforehand which company will win the contract and how much they will charge.

Price-fixing is another form of collusion where companies agree to set the prices of their products or services at a certain level. This eliminates competition among them and allows them to charge higher prices.

Market allocation is when firms agree to divide up the market by assigning territories or customers to each other. This can result in reduced competition and higher prices.

These types of illegal agreements can have a significant impact on the economy and consumers. When prices are artificially high due to collusion, consumers end up paying more for goods and services. This reduces their purchasing power and can affect the overall health of the economy.

In addition, collusion can harm small businesses that cannot compete with larger companies that have formed an illegal agreement. This can lead to market domination by a few large companies, limiting the choices available to consumers.

To prevent illegal agreements among firms to divide the market, antitrust laws exist in many countries. These laws prohibit collusion and other types of anticompetitive behavior. Companies found guilty of violating antitrust laws can face significant fines and legal penalties, including imprisonment for executives involved in the illegal activity.

In conclusion, an illegal agreement among firms to divide the market is a serious violation of antitrust laws and can have a negative impact on consumers and the economy. Companies must compete fairly to ensure a level playing field for all businesses and provide consumers with choices and fair prices.