What is antitrust law?

In tough economic times, it is not easy to start a business. Many New York businessmen and business women may be trying to come up with new gimmicks or promotions to put their goods or services out there for consumers to notice and purchase. There are some activities that may seem innocent, but can wind up being illegal under certain antitrust regulations.

When economic power is concentrated in the hands of a few, such as in monopolies or trusts, the public is affected because either their access to goods and services become limited or prices are controlled by the reigning companies. Antitrust laws, in the form of the Sherman Antitrust law and the Clayton Antitrust Act of 1914, cover these activities and aims to protect consumers against price fixing and illegal restraint of trade, among other unfair competition behaviors.

When companies within a given market set the price artificially or maintain the price of goods or services at a certain level, price fixing has occurred. This is an illegal restraint of trade and is prohibited by the Sherman Act. Predatory pricing, the other side of the spectrum whereby the price is set below cost level, is also forbidden under the Sherman Act as it prevents new sellers and competition from entering the market.

There are times when companies may work together to control the market, either by introducing tying or exclusive dealing arrangements. A tying arrangement is one in which a party sells a product on the condition that either the buyer agrees to buy other products from the same seller or won’t buy other products from another seller. An exclusive dealing arrangement is one in which a retailer agrees to buy exclusively from a manufacturer, making it difficult for new companies to enter the market. As both of these activities are somewhat prevalent in the market, they are not banned outright by the Sherman Act. They must be reasonable, however, and can be challenged if they not.

It is important to be familiar with various laws regarding competition to ensure that one is not violating them. When beginning a business, it may be in New York residents’ best interests to consider consulting an experienced attorney who could ensure that one’s business is in compliance with all regulations.

Source: Legal Information Institute, “Antitrust” accessed on Dec. 29, 2015