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What is the point of federal antitrust law?

On Behalf of | Jan 29, 2015 | Uncategorized |

When conducting business in one of the world’s most important hubs — New York — an issue that frequently arises has to do with antitrust law. While it’s a commonly heard term, many are not aware of its genesis, why it exists and how it is enforced. Understanding the purpose and details of antitrust law can help those who are trying to push a business relationship forward to avoid federal law from interfering, and it can protect those who believe that unfair competition might result from a certain business decision.

Antitrust law protects the public and saves a substantial amount of money on an annual basis. There are three federal laws dictating antitrust. Most states also have their own versions of the law. They prevent businesses from committing acts that will hinder competition and lead to higher prices of goods and services through one entity controlling the entire business area. The antitrust laws under federal guidelines are: The Sherman Antitrust Act, the Clayton Act and the Federal Trade Commission (FTC) Act.

The Sherman Act prevents businesses from conspiring to cause restraint of trade. It is meant to stop bid rigging, price fixing and other tactics. These will lead to felony charges if they happen. It also outlaws monopolies. The Clayton Act is a civil law and doesn’t carry criminal charges. If a merger or acquisition is likely to harm competition, it will not be allowed. The government will watch for mergers and acquisitions that could lead to consumers having to pay higher prices. When a large merger is in play, the companies must inform the Antitrust Division and the FTC. The FTC Act is meant to stop unfair competition in interstate commerce. There are no criminal penalties with this either.

The government intervenes with laws like these ostensibly to protect consumers. However, there are times when this governmental interference could stop a business from making a good faith attempt to improve its standing. Having a handle on how the federal law works with assistance from a business-minded legal professional can be one way to try to prevent antitrust law from stopping an attempt to move forward and improve a business.

Source: justice.gov, “Antitrust laws and you,” accessed Jan. 27, 2015

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