Antitrust Laws

Antitrust Law

Regulations that govern business conduct to promote competition and prevent unjustified monopolies.

Sherman Antitrust Act (1890)

prohibits combinations and contracts restraining interstate trade.

Federal Trade Commission Act (1914)

established the FTC and prohibits unfair methods of competition and deceptive acts.

Clayton Antitrust Act (1914)

prohibits anticompetitive mergers, acquisitions, and interlocking directorates.

Robinson-Patman Act

Enacted in 1936, it strengthens the prohibition on discriminatory pricing to prevent reduced competition or monopolies.

Horizontal Competition

Competition between competitors in the same industry.

Vertical Competition

Competition along the supply chain.

Conglomerate Competition

Competition among firms in different industries.

Monopolization

Prohibited by Section 2 of the Sherman Antitrust Act, requires possession of monopoly power and willful acquisition or maintenance of that power.

Price Fixing

An anticompetitive behavior prohibited by the Sherman Antitrust Act, involving competitors fixing prices or exchanging price information.

What level can the DOJ and FTC enforce at?

Federal

One anti-competitive behavior can violate multiple antitrust statutes T/F

T

Section 1 under Sherman Antitrust Act - purpose and 2 steps for a violation

Prohibits unreasonable restraint of trade 

1. Must be a per se violation (price fixing, dividing markets, rigging bids, boycotts)

2. if not, apply rule of reason to alleged violations (if anticompetitive harm < procompetitive benefits of the practice, NOT unlawful)

Section 2 under Sherman Antitrust Act - purpose and 2 steps for a violation

Prohibits monopolization

1. must possess monopoly power

2. where there was willful acquisition of that power - gained through improper conduct to exclude competitors

4 elements to determine monopoly power

1. ability to control price

2. no alternative products if price increases

3. dominance in market

4. holds significant share of the market

When is price discrimination permitted?

1. Difference in grade, quality, quantity 

2. Cost of transportation taken into consideration

3. Good-faith effort to meet competition 

4. Deterioration of goods/close-out sales  

Predatory pricing

when seller sets price below cost in a strategy to eliminate competitors and create monopoly