When multiple companies in an industry agree to restrict competition and manipulate prices for their own benefit, it constitutes a collusive agreement. This type of agreement is commonly referred to as a cartel, and its effects can be detrimental to the overall health of the economy, particularly for consumers.

A collusive agreement can take many forms, such as price fixing, market allocation, and bid rigging. In a price-fixing scheme, companies agree to set prices for their products or services at a certain level, rather than competing with each other to offer the lowest prices. This results in higher prices for consumers and restricts their ability to choose based on price.

Similarly, market allocation involves dividing up a market among competitors and agreeing not to enter each other`s designated territories. This limits consumers` choices and creates a monopoly-like environment where one or a few companies dominate the market.

Bid rigging occurs when companies collude to manipulate the bidding process in a particular industry, driving the price of goods or services up. This ultimately harms consumers, who end up paying more than they would if the competitive bidding process were allowed to work properly.

These types of collusive agreements are illegal in many countries, including the United States. Companies caught engaging in this type of activity may be subject to hefty fines and reputational damage. Additionally, consumers affected by the collusive agreement may have legal recourse to seek compensation for the harm caused.

Overall, collusive agreements undermine the principles of a free market economy and harm consumers. It is important for governments and regulators to take swift action to investigate and punish companies that engage in this type of activity, in order to protect the public and maintain a fair and competitive marketplace.