Guide Note

Antitrust law is the collection of laws that prohibit monopolies and unfair business practices. These laws make practices that violate ethical standards of behavior and hurt businesses and or consumers illegal. Some of the harmful effects of monopolies compared to free competition are high prices, price fixing, poor customer service, low production levels, poor product quality, slower technological advancements and it can corrupt the political system. The term antitrust comes from the government fighting what was called business trusts but are now more commonly called cartels.

Fast Facts

1. Prohibits restriction of free trade and competition
2. Bans abusive behavior and anti-competitive actions
3. Banned practices include price fixing, price gouging among others
4. The Sherman Act passed in 1890
5. Federal Trade Commission Act passed in 1914
6. The Clayton Act passed in 1914

The core of U.S. antitrust law is the Sherman Antitrust Act of 1890. The Act makes it illegal to form a monopoly or to engage in the restraint of free trade. It also made government lawyers and districts courts responsible for the pursuit and investigation of companies and organization suspected of breaking the Antitrust laws.

The Clayton Act of 1914 allowed “any person who shall be injured in his business of property by reason of anything forbidden in the antitrust laws.” In other words, anyone can sue in U.S. district court and if they win the case they could be awarded treble damages, lawyer fees and court costs.

The Federal Trade Commission came into being with the passing of The Federal Trade Commission Act of 1914. It is a group of bipartisans appointed by the President of the United States. Their terms last for seven years. The Commission is charged with issuing Cease and Desist orders to corporations with unfair trade practices. Conducting investigations, define the trade rules and report their findings and make recommendations to Congress.

Alan Greenspan is an Antitrust Law opponent. He feels that businesses are discouraged from some actions out of fear they may be considered illegal. He says “No-one will ever know what new products, processes, machines , and cost-saving mergers failed to come into existence, killed by the Sherman Act before they were born. No-one can ever compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has kept our standard of lining lower than would otherwise have been possible.”