Antitrust Law Requirements
Free and open markets are the foundation of a dynamic economy. Aggressive competition between sellers in an open market offers consumers – individuals and businesses – the benefits of lower prices, better products and services, greater choice and greater innovation. The FTC`s competitive mission is to enforce the rules of the competitive marketplace – antitrust laws. These laws promote intense competition and protect consumers from anti-competitive mergers and business practices. The FTC`s Competition Bureau, in partnership with the Bureau of Economics, enforces antitrust laws for the benefit of consumers. Judge Robert Bork`s writings on antitrust law (particularly The Antitrust Paradox) as well as those of Richard Posner and other legal and economic thinkers had a great influence on a change in the United States. The Supreme Court`s approach to antitrust laws since the 1970s has focused solely on what is best for the consumer, rather than on the company`s practices. [48] Progressive-era officials have placed the adoption and enforcement of strong antitrust law at the top of their priorities. President Theodore Roosevelt sued 45 companies under the Sherman Act, while William Howard Taft sued nearly 90. In 1902, Roosevelt stopped the creation of the Northern Securities Company, which threatened to monopolize transportation in the Northwest (see Northern Securities Co.c. United States).
Because of the emphasis on markets and prices, antitrust law often overlaps with the field of economics. While most antitrust lawyers will point out that an economic context is not essential to the practice – and in fact, many lawyers do not have such experience – those with a background in economics may initially feel more comfortable with antitrust law issues. The field also extends to the world of intellectual property (IP), as intellectual property protection confers a monopoly on the owner of intellectual property for a certain period of time. Attorneys general can sue to enforce state and federal antitrust laws. The Sherman Act prohibits “any contract, combination or conspiracy to restrict trade” and any “monopolization, attempted monopolization, conspiracy or combination to monopolize.” A long time ago, the Supreme Court ruled that the Sherman Act does not prohibit any trade restrictions, but only those that are inappropriate. For example, an agreement between two people to form a partnership restricts trade in one direction, but must not do so inappropriately and may therefore be legal under antitrust laws. On the other hand, some actions are considered so anti-competitive that they are almost always illegal. These include simple agreements between competing individuals or companies to set prices, divide markets or manipulate bids. These acts constitute violations “in themselves” of the Sherman Act; in other words, no defence or justification is allowed. A group of economists and lawyers, largely associated with the University of Chicago, advocates an approach to competition law guided by the thesis that certain actions originally considered anti-competitive could in fact promote competition.
[66] The U.S. Supreme Court has used the Chicago School approach in several recent cases. [67] A view of the Chicago School`s antitrust approach can be found in the books Antitrust Law[68] and Economic Analysis of Law by Judge Richard Posner of the U.S. Circuit Court of Appeals. [69] The Competition Bureau has developed various resources to explain its work. For an overview of the types of issues examined by the Bureau, see Number of Competition Cases. This guide to antitrust laws provides a more in-depth discussion of competition issues for those with specific questions about antitrust laws. See the table below for fact sheets on various competition topics, along with case studies and frequently asked questions.
In each section, you will find links to more detailed guides developed by the FTC and the U.S. Department of Justice. Sign up to receive the latest news, resources, and updates on antitrust-related events. The FTC enforces federal antitrust laws and focuses on segments of the economy where consumer spending is high, including healthcare, drugs, food, energy, technology, and everything related to digital communications. Factors that could trigger an FTC investigation include pre-merger notification filings, certain consumer or business correspondence, congressional investigations, or articles on consumer or economic topics. According to laissez-faire doctrine, antitrust law is considered useless because competition is seen as a dynamic, long-term process in which companies compete to dominate the market. In some markets, a company can successfully dominate, but this is thanks to superior skills or a capacity for innovation. However, according to laissez-faire theorists, when it tries to raise prices to exploit its monopoly position, it creates profitable opportunities for others to compete.
A process of creative destruction begins, which undermines the monopoly. Therefore, the government should not try to break the monopoly, but let the market work. [57] It may be useful to divide the practice of cartels into two broad categories: (1) litigation/investigations and (2) mergers. One of the most well-known cartel cases in the recent past concerned Microsoft, which committed anti-competitive and monopolizing acts by imposing its own web browsers on computers on which the Windows operating system was installed. Thomas DiLorenzo, a follower of the Austrian School of Economics, noted that the “trusts” of the late 19th century lowered their prices faster than the rest of the economy. and he claims that they were not monopolists at all. [60] Ayn Rand, the American writer, provides a moral argument against antitrust laws. She believes that these laws fundamentally criminalize anyone involved in the success of a business and are therefore flagrant violations of their individual expectations. [61] These laissez-faire advocates suggest that only a coercive monopoly should be broken, that is, exclusive and persistent control over a vital resource, good or service, so that the community is at the mercy of the controller and there are no suppliers of the same or equivalent goods to which the consumer can turn.
In such a monopoly, the monopolist is able to make price and production decisions without keeping an eye on competitive market forces, and he is able to restrict production in order to impose a price burden on consumers. Proponents of laissez-faire argue that such a monopoly can only arise through the use of physical coercion or fraudulent means by enterprise or state intervention, and that there is no case in which a coercive monopoly has never existed that was not the result of government policy. In 1914, Congress passed the Federal Trade Commission Act, which prohibited methods of unfair competition and deceptive acts or practices. As of 2020, the Federal Trade Commission (FTC) is a federal agency responsible for enforcing federal antitrust laws. The Clayton Act was also passed in 1914 and deals with specific practices that the Sherman Act does not prohibit. .