Collusion Law and Legal Definition

Collusion occurs when two persons or representatives of an entity or organization make an agreement to deceive or mislead another. Such agreements are usually secretive, and involve fraud or gaining an unfair advantage over a third party, competitors, consumers or others with whom they are negotiating. The collusion, therefore, makes the bargaining process inherently unfair. Collusion can involve price or wage fixing, kickbacks, or misrepresenting the independence of the relationship betweeen the colluding parties.

For example, in a divorce action, the husband and wife may agree to fabricate a story or suppress evidence to provide evidence of lawful grounds for a divorce. As another example, collusion may involve cooperation between competing sellers, in the form of an agreement, express or tacit, limiting competition, or a merger or other means to raise the market price above the competitive level.