A Legal Warning Can Prevent an LLM Cartel, but Not Break One

LLM agents in markets are usually judged as colluding when they price above the competitive level. We asked whether an evaluator-trusted agent can expose or disrupt collusion in a published double-auction benchmark. Its balanced market makes any price between cost and value competitive, so we added sellers to make the competitive price unique. In this fixed market the opening order book sets the price ($4.66 lower for a $5 lower opening), and seller chat has no detectable effect, even though GPT-4.1 sellers talk like a cartel: high prices alone cannot identify collusion. A scripted "undercover" seller proposing price-fixing measured disposition, not behavior: GPT-4.1 sellers accepted 24 of 30 times, GPT-4.1-mini 2 of 60, and acceptance did not predict prices. We then gave sellers a real cartel, a CEO instruction to hold $95, which every seller kept. A trusted peer could not break it: undercutting at $89 moved none of 80 sellers, and its warning that price-fixing is illegal drew concealment from 15 of 40. A legal notice given with the CEO's instruction prevented the cartel: all 100 sellers defected. One hour into the cartel, the regulator's same notice mostly failed: in chat it moved no seller, though all 50 began citing the law; in sellers' instructions it moved 10 of 50. Legal warnings worked as prevention, not cure. Collusion evaluations need non-collusive baselines and positive controls, and interventions should be judged by prices, not talk.