ARC.EXE for MS-DOS was released by System Enhancement Associates (SEA) around
1985.  It will compress and store groups of files as one file, making it
easier and quicker to download programs and support files at once. Because of
the ease of use and availability of this program, it quickly became the
de facto standard for file archives on Intel-based IBM machines.  Files
compressed and stored with ARC or a compatible utility are normally given the
filename extender ".arc".

The 8-bit Atari computers have several software utility options that are fully
compatible with ARC.EXE, the most important being:

Super UnArc 2.4 and Super Arc 2.4 - shareware by Bob Puff, released 01/31/89
Available: 
http://www.nleaudio.com/css/files/superarc.arc (complete package + docs)

Also, SpartaDOS X includes a fully compatible ARC command for both creating
and extracting .arc files.