Antitrust Laws

Let’s look at Invesopedia’s definition of antitrust laws. Investpedia defines Antitrust laws “as competition laws. They are statutes developed by the U.S. government to protect consumers from predatory business practices. They ensure that fair competition exists in an open-market economy. These laws have evolved along with the market, vigilantly guarding against would-be monopolies and disruptions to the productive ebb and flow of competition. Antitrust laws are applied to a wide range of questionable business activities, including but not limited to market allocation, bid rigging, price fixing, and monopolies. If these laws didn’t exist, consumers would not benefit from different options or competition in the marketplace. Furthermore, consumers would be forced to pay higher prices and would have access to a limited supply of products and services.”

The three major Federal antitrust laws are:

  • The Sherman Antitrust Act
  • The Clayton Act
  • The Federal Trade Commission Act

The Sherman Antitrust Act identifies that it is illegal to monopolize any part of interstate commerce. Companies are not allowed to conduct business which is unreasonable, rigged, shows favoritism due to biases, or restrains interstate and foreign commerce. It also identifies that an unlawful monopoly exists when a business controls the the market or a service of an industry due to suppressing competition.

The Clayton Act prohibits mergers or acquisitions that would lessen competition. An example of this would be a merger between Apple and Verizon Wireless. Both of these companies are major players in the telecommunications industry. Prior to merging together, these companies would have to contact the Antitrust Division and the Federal Trade Commission to evaluate the merger. There is a possibility that these two companies would not be able to merge due to controlling a huge portion of the market and the merger creating a monopoly in which they would be able to control the prices.

The Federal Trade Commission Act is the primary statute of the Commission. Under this Act, as amended, the Commission is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress and the public.”

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