What are securities and antitrust laws?
What Are Antitrust Laws? Antitrust laws also referred to as competition laws, 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.
Antitrust rules prohibit agreements between market operators that would restrict competition, and the abuse of dominance.
The Federal Government. Both the FTC and the U.S. Department of Justice (DOJ) Antitrust Division enforce the federal antitrust laws. In some respects their authorities overlap, but in practice the two agencies complement each other.
The core of U.S. antitrust law was created by three pieces of legislation: the Sherman Antitrust Act, the Federal Trade Commission Act, and the Clayton Antitrust Act.
These laws promote vigorous competition and protect consumers from anticompetitive mergers and business practices. The FTC's Bureau of Competition, working in tandem with the Bureau of Economics, enforces the antitrust laws for the benefit of consumers.
The Sherman Antitrust Act
This law prohibits conspiracies that unreasonably restrain trade. Under the Sherman Act, agreements among competitors to fix prices or wages, rig bids, or allocate customers, workers, or markets, are criminal violations.
Price-fixing agreements, since they reduce competitors' ability to respond freely and swiftly to one another's prices, diminish consumer surplus by interfering with the competitive marketplace's ability to keep prices low.
Antitrust law is the law of competition. Why then is it called “antitrust”? The answer is that these laws were originally established to check the abuses threatened or imposed by the immense “trusts” that emerged in the late 19th Century.
The Attorney General vigorously enforces the antitrust laws and acts upon any information indicating antitrust violations that affect the California public. Such actions can include investigations, and, when necessary, court actions.
Why are antitrust laws not enforced?
The federal government, for example, may bring fewer antitrust cases because it has changed its enforcement philosophy. Or a judicial decision may limit the reach of the antitrust laws by limiting the government's ability to challenge certain types of cases.
Antitrust Makes Mergers And Acquisitions Difficult
Big organizations have always been more efficient. This phenomenon is known as economies of scale. Antitrust laws prevent organizations from achieving economies of scale. Many mergers and acquisitions have been disrupted by these antitrust laws.
Antitrust violations occur when an antitrust law is broken; laws protecting trade and commerce from abusive practices such as price-fixing, restraints, price discrimination, and monopolization.
Violations under the Sherman Act are prosecuted as felonies and carry steep penalties. Individuals face up to 10 years imprisonment and up to $1,000,000 in fines, or both.
The Antitrust Division acts as an advocate for competition, seeking to promote competition in regulated sectors of the American economy. These sectors include: Federally regulated industries, such as communications, banking, agriculture, securities, transportation, energy, and international trade.
A naked agreement among competitors to fix prices is almost always illegal, whether prices are specified at a minimum, maximum, or within some range.
Without the continued vigilance of the government, so the argument goes, large corporations would ruthlessly destroy their smaller rivals and then raise prices and profits at consumers' expense. But antitrust has a dark side; it often is used to the detriment of the consumers it's supposed to protect.
Many monopolies were considered good monopolies, as they bring efficiency to some markets without taking advantage of consumers. Others are considered bad monopolies as they provide no real benefit to the market and stifle fair competition.
City of Boulder, Colorado (the Boulder decision) that sub-state governmental entities (cities, towns, counties, state chartered agencies and other local governments) are subject to review under the federal antitrust laws first passed by the U.S. Congress in 1890 (the Sherman Act).
The act was designed to restore competition, but it was loosely worded and failed to define such critical terms as "trust," "combination," "conspiracy," and "monopoly." Five years later, the Supreme Court dismantled the act in United States v.
Why did the US create antitrust laws?
Why Was the Sherman Antitrust Act Passed? The Sherman Antitrust Act was passed to address concerns by consumers who felt they were paying high prices on essential goods and by competing companies who believed they were being shut out of their industries by larger corporations.
This law penalizes illegal restraints of trade and monopolies, or attempts to monopolize, with imprisonment for up to ten years and fines for individuals up to $1,000,000 and, for corporations, up to $100,000,000, or both, in the discretion of the court.
The FTC portrays Amazon as a monopoly by narrowing the relevant market to “online superstores.” That definition conveniently limits Amazon's competitors to Walmart and Target.
Antitrust Division | Sherman Act Violations Resulting in Criminal Fines & Penalties of $10 Million or More.
For example, manufacturers and retailers may conspire to sell at a common "retail" price; set a common minimum sales price, where sellers agree not to discount the sales price below the agreed-to minimum price; buy the product from a supplier at a specified maximum price; adhere to a price book or list price; engage in ...
