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Antitrust

Antitrust laws refer to the set of legal norms aimed at promoting market competition and limiting market power of any enterprise. This is the key tool that puts bounds on monopolistic activity and unfair competition.

In fact, antitrust laws are about to refrain companies from colluding or creating a cartel, so that there is no room for limiting competition by virtue of practices like price fixing. Seeing that the decision-making process is hard enough, antitrust law has emerged into a standalone legal field.

Essence of the term

Antitrust law represents a system of regulations designed to protect a consumer from the manufacturer’s monopoly by establishing economic and organizational restrictions. The “trust”, in this sense, is a way the group of firms transforms into a monopoly. The reason is quite simple: to set favorable pricing in a certain market.

Criticisms and praises

Proponents argue antitrust laws are essential as competition between sellers contributes to lower price range, along with greater quality and faster innovation speed. A majority has the same view, clearly estimating strong points of the open market. Others claim that establishing strong commercial relationships can be a better option in times of economic upheavals. 

So, antitrust regulation may ensure competition, or act as a tool for market wars, violating property rights and eroding the rule of law.

Antitrust laws

To combat national market monopolization, special codes of laws have been developed to regulate the economic activities of corporations. In this sense, the United States is no exception, as government agencies implement a rather tough antitrust policy, which provides benefits for the country’s market. In other words, the U.S. level of monopolization remains one of the lowest in the world.

Antitrust policy is determined by several legal acts:

  • The Sherman Act. It classifies a certain enterprise against occupying a dominant market position. Trade monopolization is completely prohibited, as well as the existence of trusts. Failure to comply with these rules leads to criminal liability.
  • The Clayton Act. A law prevents corporate-company mergers when competition arises. It also declares a full support for healthy business races in the market. 
  • The Federal Trade Commission Act. A law gives the FTC enforcement powers and prevents unfair methods of competition. Back in 1938, the Wheeler-Lea Amendment to the act was passed. The FTC has also been given the ability to restrict misleading advertising so that consumers and competitors can be legally protected.
  • The Robinson-Patman Act. It is aimed against price discrimination. The essence is to bring to criminal responsibility those companies that set the so-called "extortionate" prices, i.e. the costs, which are significantly lower than the market average.

Note: antitrust laws give broad strokes of illegal mergers and other unlawful activities, allowing courts to determine whether these practices are contrary to established acts.

Antitrust structures

Compliance with antitrust legislation is monitored by:

  • The Supreme Court. The regulator inspects the legitimacy of the company's methods for operating and concluding contracts. 
  • The Federal Trade Commission. The agency monitors sectors of the economy where consumer spending is relatively high, meaning healthcare, pharmaceuticals, foodstuff, energy and all that falls into the category of digital technologies. A trigger for conducting investigation can be the following: preliminary notices of mergers, related correspondence, or articles tagged with economic and consumer labels. 
  • The Ministry of Justice. Its specialized unit initiates criminal proceedings against firms that violate antitrust laws. This legal body is entitled to impose criminal penalties and possess exclusive antitrust jurisdiction in specific areas, including telecommunication services, financial institutions, rail lines, and airlines. 

State structures issue permission for the merger limited to cases where the new company is more viable in the domestic and global markets.

Real life examples

Several companies in the U.S. market have been accused of monopolies’ formation. Thus, e-commerce leader Amazon deliberately creates a conflict of interest by offering its own products, along with goods from third-party sellers. The platform also has access to their data, making its position more advantageous.

Computer and smartphone maker Apple has gained a monopolistic position by installing its own software. The company doesn’t allow users to install apps from other sources rather than the App Store.

Facebook, in turn, occupies a dominant position in social networking through merging competitors and developing function-analogues of popular services. 

U.S. authorities have taken seriously the regulation of IT corporations’ arbitrariness. Antitrust laws of the country were written more than 100 years ago. Now the Congress ensures their operating capacity in the changing conditions of the digital age.

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