ARC is a file format by SEA (System Enhancement Associates) that was very popular before Phil Katz's introduction of the ZIP format. The file format and the program were both called ARC. The ARC program essentially made obsolete the use of combinations of the SQ program to compress files and the LU program to create .LBR archives by combining the functions of both compression and archiving into a single program. ARC compresses multiple files into one - but unlike ZIP, not entire directory trees. The .arc format was the subject of quite a bit of controversy in the 1980s - an important event in the open source debate.
.arc is often also used as a file extension for several different file types that have in common that they are some kind of archive files.