Antitrust laws are known as ‘competition laws’; they are created by the government to protect consumers from harmful and unfair business practices and establish an honest competition between companies (Bynum, 2017). Antitrust laws fight barriers to entry such as price-fixing and monopolization of resources that kill competition in the industries by preventing new companies from entering the spheres and diversifying competition that promotes respect for consumers.
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Some of the known antitrust statutes in the United States are the Sherman Antitrust Act and the Clayton Antitrust Act. The latter regulation was the first act in the US history to outlaw monopolistic and predatory business practices; it was signed into law in 1890 and focused on the prevention of the trust practices that killed the competition in multiple industries allowing the trustees to monopolize resources and revenue (“Sherman Anti-Trust Act (1890),” n.d.). Clayton Act was signed a couple of decades later as an amendment of Sherman Act; it targeted such practices as price discrimination and price-fixing specifically (“Clayton Antitrust Act,” 2017).
The latter barriers to entry are some of the most significant and the cases of their breach still exist in the modern business. For example, the case of AT&T that was accused on monopolizing the telecommunications industry by taking over the resources and spreading to locations where its brand image and economy of scale served as the barriers for new entrants; the company claimed to be the so-called “natural monopoly” – the only owner of resources in the industry; however, the court decided that AT&T should be broken into several smaller companies operating in separate geographical markets (“Infamous antitrust cases,” 2017).
Based on Sherman Act, the Supreme Court has decided many cases. In Leegin Creative Leather Products, Inc. v. PSKS, Inc., the Supreme Court ruled that it was not per se illegal for manufacturers to set a minimum resale price for the distributors to change for their products (“Supreme Court antitrust rulings,” 2017). This case was an overruled precedent of 1911 (Dr. Miles Medical Co. v. John D. Park & Sons Co.) where such practice was decided to be per se illegal (“Supreme Court Antitrust Rulings,” 2017). However, according to the latest ruling, the price-fixing for resellers could promote competition and help the distributors protect their profit margins. In that way, price-fixing is considered illegal only in the cases when it is anti-competitive.
Bynum, J. (2017). What is an antitrust law?
Clayton Antitrust Act. (2017).
Infamous antitrust cases. (2017).
Sherman Anti-Trust Act (1890). (n.d.).
Supreme Court antitrust rulings. (2017).