What practice involves companies dividing markets and agreeing not to compete against each other?

The correct answer, which refers to "Allocation of Customers," describes a practice where companies agree to divide markets among themselves by designating specific customers or areas they will target, effectively reducing competition in those designated regions. This arrangement allows each company to monopolize a portion of the market without directly competing for the same customers, which can lead to less competitive prices and limited choices for consumers.

In the context of antitrust laws and competition regulations, such practices are illegal because they undermine the free market by restricting competition and can harm consumers. Regulatory bodies monitor and take action against such practices to maintain fair competition in the marketplace.

While "Market Sharing" and "Collusion" might seem relevant, they refer to broader concepts. Market sharing can be a specific instance of allocation, but it lacks the precise focus on customer division. Collusion is a general term for secret cooperation between companies that may include price-fixing or other anti-competitive agreements, making it also less specific than the correct option. Price control involves setting prices at a certain level, often through regulation, and does not specifically denote the division of markets or customers.