Many of these statutes are based on the federal antitrust laws. Main Menu. You are here. Guide to Antitrust Laws. Here is an overview of the three core federal antitrust laws. I Would Like To Stay Connected with the FTC. Tracy wsj. Kendall wsj. To Read the Full Story. Subscribe Sign In. Increasingly, states, which also have antitrust laws, are getting involved in enforcing those laws, particularly in places where they feel the federal government is not enforcing sufficiently.
Imagine if one paycheck had to cover monopoly profits in all different kinds of areas where today we have robust competition.
That would make our standards of living fall. Fiona M. Video editing and animation by Benjamin Hecht. This is nothing other than marketplace economics working properly and rewarding each of us for our efforts, our talent, and our perseverance. The antitrust laws exist to help marketplace economics to work better. Antitrust law is the law of competition. These trusts controlled or threatened to control entire nationwide markets for rail transport, steel, petroleum, banking, and related lines of commerce.
The antitrust laws were established to ensure that these trusts did not permanently undermine competition in these or other markets. The antitrust laws serve to promote and protect market economics, doing so on the theory that society flourishes the most when it is founded on vigorous competition: According to this theory, competition brings forth the best in each of us, keeping each of us on our toes, mindful that if we do not perform well, we will be cast aside for someone else who can perform better.
It is a harsh logic, and it works very well because it rightly understands and anticipates actual human nature and human psychology in action. To paraphrase Adam Smith, the baker does not ask himself whether you might wish to enjoy some of his excellent bread this evening with your meal.
No, he wants you to give him money, and thus he strives to make excellent bread so that you will be persuaded to purchase your bread from him and not from some other baker. Antitrust laws are meant to ensure that these incentives and the resulting excellence and low prices flourish in every market save those that by their very nature admit the presence of only one seller. We want to have many bakers competing for your business.
If you happen to be a baker, we want you to compete against your rivals for our business. We do not want one baker, or a group of bakers, to destroy competition in their local market so that they can then force the customers to submit to higher prices, less responsive service or poorly baked bread.
The antitrust laws exist not to punish or dismantle successful, prosperous companies, even the most dominant global monopolies of the era. These laws instead are meant to redress or temper the fundamental flaw that seems inherent in unbridled competition. Once this happens, competition in this market ceases altogether or at best becomes a pale shadow of its former self. Antitrust laws provide protection and relief from this scenario. If competition obliges sellers to act on their best behavior, then the antitrust laws oblige dominant competitors to do the same rather than abuse their dominance in order to take advantage of their captive customers.
The only other alternatives are as follows: 1 Do nothing and allow various anti-competitive monopolies and cartels to form and suffocate commerce, innovation and responsive service in the markets that they control; or 2 impose stultifying government regulation.
More specifically, the antitrust laws serve to check and redress the improper acquisition and abuse of market dominance. In particular, these laws forbid two categories of conduct: 1 monopolization — i. Why these proscriptions? Because the antitrust laws presuppose that unrestrained market competition is the best method of promoting lasting prosperity and wealth for the greatest number. But unrestrained competition, put into practice, often leads to the emergence of stultifying monopolies and oligopolies that take unfair advantage of their customers while hindering innovation and commercial excellence.
This is the great and eternal contradiction of market economics, and it is this contradiction that the antitrust laws seek to redress. Antitrust laws, properly understood, are intended to grapple with this market contradiction. In particular they forbid any improper monopoly or any attempt to obtain a monopoly by improper means — that is, a monopoly obtained, preserved or attempted by a firm that on purpose has destroyed or tried to destroy its competitors, using anti-competitive tactics whose sole or true purpose has been to undermine rival businesses.
These laws also outlaw specific kinds of recognized commercial fraud that by their very nature are calculated to destroy competition in the market in which they are employed the most notable offenders are bid-rigging, price-fixing, and horizontal market allocation.
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