PROMOTING COMPETITION BY PROHIBITING ANTI-COMPETITIVE PRACTICES
Antitrust regulation was created to protect against abuses that result when companies have the power to control pricing or prevent competitors from participating in the marketplace.
Regulation is justified on the premise that the consumer will ultimately benefit from free and fair competition. Market forces will determine pricing and quality and innovation will be encouraged if manufacturers play by the rules.
Examples of conduct prohibited by antitrust laws include:
MONOPOLIZATION & PREDATORY PRICING: Monopolization occurs when a market participant wrongfully uses its power to wrongfully exclude competitors. One classic example of such behavior is predatory pricing – when a company drops the price of a product for the purpose of eliminating competitors (with the long-term goal of raising them once the competition is eliminated).
PRICE FIXING: Competitors in the marketplace cannot make agreements to set the price of a product. Price fixing undermines market forces and subjects consumers to artificially inflated prices.
TYING ARRANGEMENTS: When a seller conditions the purchase of one product on the purchase or non-purchase of another item, the seller is “tying” the products. There are times when such arrangements are lawful, but not when the tying arrangement eliminates competition in the marketplace. Depending on the market-share and affect on competition in the marketplace, there are various levels of judicial scrutiny applied to tying arrangements.
REFUSAL TO DEAL: While companies are generally free to choose whether to deal with other companies or customers, when their market power gets to a certain level, the law may require that a company make its product available to a certain group. An example might be a supplier that refuses to sell to someone who does business with its competitor. Such conduct adversely affects the consumer and the competitor, and does not have a market justification. However, other refusals to deal, such as an “exclusive” distribution arrangement, may be perfectly legal.
ENFORCEMENT, CIVIL ACTIONS & TREBLE DAMAGES
Both federal and state agencies can enforce antitrust laws. Often times, companies that are victim of anti-competitive practices can use the antitrust laws to bring private civil lawsuits when they suffer damage to their business from their competitors.
Individual consumers rarely have standing to sue for antitrust violations, and cases brought for the benefit of the public are usually initiated by the U.S. Attorney, Federal Trade Commission, or the various state’s attorneys general.
Under the Clayton Act, a plaintiff who prevails on an antitrust claim is entitle to triple or “treble” the actual damages suffered.