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A series of laws enacted to limit anticompetitive behavior in almost all industries, businesses, and professions operating in the United States
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Originally designed to protect the viability of a market system composed of small businesses.
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Social Policy & Antitrust Laws
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As social policy, the antitrust laws express concern about concentrations of economic power and the potential for abuse inherent in that concentration.
The constitution controls political power through checks and balances among the branches of government and through popular elections, antitrust policy has focused on controlling economic power.
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unreasonable restraint of trade
-monopolizing is a felony
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substantially lessen competition
-discriminating in the price between different purchasers
-prohibits mergers that may lessen competition or create a monopoly
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1914 Federal Trade Commission Act
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unfair methods of competition
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Lack of specificity
General terms
Ambiguity
Left open to interpretation in their application
Current application of the antitrust statutes:
Economic efficiency – the more competition there is the better it is for the consumer.
Competition keeps an industry healthy.
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the more competition there is the better it is for the consumer.
Competition keeps an industry healthy
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to affect the price of goods or services.
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has the ability to control prices or exclude competition.
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willful act to acquire or maintain the power
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Antitrust Policy Making Institutions
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Congress: legislation, appropriation, exemption
Federal Court System: interpret ambiguities leaning to economic efficiency
Administrative Agencies: DOJ & FTC
Executive: appointments – political philosophy
Private Sector: private actions to recover
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Cabinet level
More aligned with President
Sherman & Clayton Acts
Criminal enforcement
Complaint driven
Disclosure statement revealed
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- Created by the federal trade commission act
Independent Regulatory Agency
5 commissioners no more than 3 of the same political party 7-year term
Sherman, Clayton & FTC Acts
Complaint driven
Disclosure statement revealed
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Injunction
Specific performance
Damages
The above plus
Costs, attorney’s fees, treble damages
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An agreement reached by the litigants under the sanction of a court.
Reduces liability, it is not a law violation.
Benefits the market, generally involves restrictions on the actions by defendant.
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Only unreasonable restraint of trade is prohibited.
Weigh out the benefits against the harms
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Rule of Reason:
Courts examine
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The pro- and anticompetitive effects of the challenged restraint
The competitive structure of the industry
The firm’s market share and power
The history and duration of the restraint
Did the defendant commit the act in question?
Was the action unreasonable?
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Potential for being so harmful to competition no argument can be made for their benefits.
No justifications of any kind can prevent the per se rule from applying.
The acts are presumed to be unreasonable.
Only defense, the act itself was not done.
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In any shape or form, is deemed anticompetitive and thus unlawful.
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An agreement between competitors to charge specified prices.
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Horizontal Division of Market Areas
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An agreement between competitors setting forth which territorial areas each may sell.
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Horizontal Price Fixing
Horizontal Division of Market Areas
The antitrust laws postulate a competitive marketplace in which rival firms compete with respect to prices, products, and services. Any behavior contrary to this is highly suspect.
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Vertical Price Agreements
Vertical Non Price Restraints
Stimulates inter-brand competition but reduces intra-brand competition
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Vertical Price Agreements
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A seller and a buyer agree with respect to the price at which the buyer will resell.
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Vertical Non-price Restraints
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(different levels of the distribution chain) Supplier of a product or service agrees with a buyer about where or to whom the buyer may resell the product or service.
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competition between sellers of the same brand
Ex: 2 toyota dealers competing against eachother |
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| dealers competing against the sellers of other makes of automobiles |
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* only the FTC can enforce the FTC Act
-sherman act
clayton act |
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A firm has such a predominant share of the market that it has the power to control prices or exclude competition.
Has the firm achieved or maintained its size by engaging in business practices that cannot be justified on efficiency grounds or are otherwise not normal for that industry?
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Unchallenged economic power deadens initiative.
Anticompetitive conduct vs. superior skill, foresight, or industry
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Mergers or acquisitions that may have the effect of substantially lessening competition are illegal.
Enforcement of this section is almost exclusively with the administrative agencies.
Hart-Scott-Rodino Act requires notification and a waiting period before mergers can go through.
Horizontal mergers: mergers of direct competitors.
Ultimate Question: Whether the effect of the merger may be to substantially lessen competition in the relevant market?
Act is intended to arrest anticompetitive effects of market power in its incipiency.
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Combinations of firms in buyer-supplier relationship
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| stomp them from doing a certain thing |
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| what was the economic loss to the competitiors |
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-changing economic conditions- industrial revolution
-farmers, small business, industrials
-large firms may possess to much political power |
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