Antitrust Law

Topics: Trust, Capitalism, Copyright Pages: 6 (1246 words) Published: January 3, 2015
Student: Dajana Grgić
Professor: Sanja Kavaz Hukić
Course: BSAD_201
Date: December 25, 2014


Research Paper

Antitrust Law in the United States


The Antitrust Law, also referred to as “competition law” of the United States is a collection of federal and state government laws which proscribe unlawful mergers and business practices in general terms. In other words, the function of Antitrust Laws is to protect consumers from predatory business practices by ensuring that fair competition exists in an open-market economy. This also means, that they leave the courts to decide which ones are illegal based on the facts of each case. Even though the Antitrust Laws have been applied in the 19th century, the main objective is still the same: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.1 Except for some certain anti-trust federal agencies, all federal litigants operate in an integrated federal court system under a single body of federal precedent. Although similar to their federal equivalent, state antitrust laws often present potential plaintiffs with remedies beyond those obtainable under federal law. 2 The term “trust” in a legal way means that one person holds property for the benefit of another. Earlier, trusts came to dominate a number of major industries, destroying competitions. Because of fears during the late 1800s that monopolies dominated America's free market economy, Congress passed the Sherman Antitrust Act to reduce market domination by individual corporations. It also forms the foundation and the basis for most federal antitrust litigations. One of the most significant cases related to Antitrust Law was United States v. Microsoft Corp. which was ultimately settled by the Department of Justice, where Microsoft Corporation was accused of becoming a monopoly and engaging in abusive practices contrary to the Sherman Antitrust Act 1890 sections 1 and 2. The Law’s Treatment of Monopolies

A monopoly is an enterprise that is the only seller of a good or service. In the absence of government intervention, a monopoly is free to set any price it chooses and will usually set the price that yields the largest possible profit. The law's treatment of monopolies is potentially the strongest in the field of Antitrust Law. Judicial remedies can force large organizations to be broken up. According to the Sherman Act §2, every: “Person who shall monopolize, or attempt to monopolize...any part of the trade or commerce among the several States" commits an offence.3 Hence, monopoly is not unlawful per se, except if acquired through prohibited conduct. Holding a dominant position or a monopoly of a market is often not illegal in itself, however certain categories of behavior can be considered abusive and therefore incur legal sanctions when business is dominant. The Antitrust Laws do not outlaw monopolies, but they forbid a firm to acquire or maintain a monopoly position by means of commercial practices whose principal purpose and effect are to undermine rival businesses.4 Mergers

The many changes in American institutions and thought during the period of rapid growth of the economy around the turn of the century resulted in the enactment of the Clayton Act, twenty four years after Congress passed the Sherman Act in 1890. Section 7 of the Clayton Act provides that it is unlawful for a person or business to acquire the stock or assets of another “where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.”5 Although most merger enforcement actions are based on Section 7 of the Clayton Act, mergers may also be challenged under Section 1 or Section 2 of the Sherman...
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