Have you ever wondered what prevents businesses from charging unreasonable prices for their products and services? Do you know what helps small businesses to grow and thrive despite the enormous competition?
Antitrust laws keep businesses in check, promoting healthy competition. These laws protect consumers from greedy companies at the same time. While they may differ from country to country, the essence of these laws remains the same.
- They affect a broad range of business activities including price-fixing, bid-rigging, and monopolies.
- These laws ensure fair competition between businesses and protect consumers from predatory business practices.
- U.S. antitrust laws developed over time from the Sherman Anti-Trust Act of 1890 to Clayton Act in 1914 and the FTC Act.
Read on as we expand on how these laws operate and how they protect both businesses and consumers. Here are three crucial things to know about these laws.
1. What are Antitrust Laws?
Free and open markets – this is what these regulations are enforcing. It prevents shady and predatory practices such as market division, price-fixing, and even agreements not to compete.
It keeps huge companies from stepping on small businesses.
At the same time, antitrust shields consumers from overpricing. Consumers can exercise their civil rights and file a lawsuit if they end up paying a product with inflated pricing. They can claim treble damages which three times the amount they paid over the true value.
2. What Constitutes the Antitrust Laws?
To better understand these laws, here are three pieces of legislation that created this law in its entirety:
The Sherman Antitrust Act
This legislation keeps business in check and promotes healthy competition. Violation of the Sherman Antitrust Act has severe repercussions. Individuals can be fined up to $1 million while corporations up to $100 million, with prison terms that can go up to 10 years.
Hereand#39;s the gist of what constitutes this legislation:
- Prevents unreasonable andquot;contract, combination or conspiracy in restraint of tradeandquot;
- Prevents andquot;monopolization, attempted monopolization or combination to monopolizeandquot;
In laymanand#39;s terms, andquot;restraint of tradeandquot; refers to fix prices, bid riggings, and customer allocation. Companies who conspire to restraint both interstate and foreign trade are in violation of the Sherman Antitrust Act.
A business that monopolized the market not because its products or services are superior, but because they suppressed the competition with shady tactics, is in violation of this legislation too.
The Clayton Act
This act propels the government to challenge mergers that can give burden to consumers with an unreasonable price increase. It also prohibits the lessening of healthy competition resulting from mergers or acquisitions.
This legislation enables private parties to file a lawsuit with a litigation settlement of up to three times the damages if harmed by violations of both The Sherman Antitrust and Clayton Acts.
The Clayton Act seeks to patch up loopholes that the Sherman Act is unable to address, particularly due to the modernization and evolving industries.
The Federal Trade Commission Act
This legislation gives the U.S. government the right to police violations of the encompassing antitrust laws. It empowers the government with legal tools they can use to reprimand those who engage with anticompetitive, deceptive, and unfair practices.
The FTC act is responsible for preventing deceptive or false advertising practices.
3. What is the Purpose of Antitrust Laws?
Antitrust protects businesses and consumers from unreasonable and anti-competitive business practices. A better way to understand the purpose of these laws is to imagine what could have been without them.
Without these laws, consumers don’t have a choice but to accept price hikes or low-quality products. Confusion will arise about who to trust because anyone can deceive their customers for false advertising.
Likewise, without these laws in place, industry giants can force small competitors out of business. They can use tactics to destroy a competitorand#39;s reputation instead of improving their products. They can even use blackmailing methods to put their contenders out of the game.
Antitrust encourage companies to focus on providing their consumers with value-added services and high-quality products.
Use Antitrust Laws to Protect Your Consumer and Business Rights
Are you at odds with the consumer credit system because of price-fixing? Is your business on the verge of being taken out of the competition resulting from a competitorand#39;s shrewd business practices? Exercise your civil rights by consulting with experts of antitrust laws like Judge Andrew Peck. Help enforce these laws by not playing as a victim.