Umbrella pricing occurs when a cartel has made it possible to maintain a market price at such a high level that competitors who are not members of the cartel could themselves take advantage of this situation, whether in terms of profit margin or simply survival, if their cost structure was such that normal competitive conditions could have resulted in their elimination from the market.

According to the Court of Justice, national legislation which precludes the victim of umbrella pricing from being able to obtain damages from the members of the cartel for the losses suffered as a result of the prices charged by a third party to the price agreement, because of the absence of contractual links with the latter, is contrary to EU law because it undermines the effectiveness of Article 101 TFEU.