What Do Antitrust Laws Prevent

In addition, the German Government is also examining possible mergers in order to avoid market concentration. As set out in the hart-Scott-Rodino Antitrust Improvements Act, large companies seeking to merge must first notify the Federal Trade Commission and the Antitrust Division of the Department of Justice before entering into a merger. [49] These authorities then first assess the proposed concentration by defining the market and then determining the market concentration on the basis of the Herfindahl-Hirschman Index (HHI) and the market share of each company. [49] The government is trying to prevent a company from developing market power that, if left unchecked, could lead to monopoly power. [49] Antitrust lawyers cooperate with extensive but structured and identifiable jurisprudence. They can also contribute to a sustainable evolution of case law. Finally, antitrust lawyers can also act as lawyers and lobbyists on behalf of companies when attempting to amend or supplement existing antitrust laws. Many antitrust lawyers find the field mentally challenging and personally rewarding. Remedies for violations of U.S. antitrust laws are as broad as any fair remedy a court has the power to seek, and it can also impose penalties. If private parties have suffered enforceable damage, they may seek compensation. Under the Sherman Act of 1890§7, these can be tripled, a measure to encourage private litigation to enforce laws and act as a deterrent. The courts may impose sanctions under §§ 1 and 2, which depend on the size of the company or enterprise.

In their inherent jurisdiction to prevent violations in the future, the courts have further exercised the power to divide the companies into competing parties between different owners, although this remedy has rarely been exercised (e.g., Standard Oil, Northern Securities Company, American Tobacco Company, AT&T Corporation, and, albeit on appeal, Microsoft). Three levels of enforcement come from the federal government, primarily through the Department of Justice and the Federal Trade Commission, state governments, and private parties. Public enforcement of antitrust laws is considered important given the cost, complexity and daunting task for private parties, of litigation, especially against large corporations. Well-understood antitrust laws aim to deal with this market contradiction. In particular, they prohibit any abusive monopoly or any attempt to obtain a monopoly by an abusive means, that is to say, a monopoly obtained, maintained or attempted by an undertaking which intentionally destroyed its competitors or attempted to destroy them by employing anti-competitive tactics the sole or real aim of which was to harm competing undertakings. Antitrust laws also prohibit dominant companies from colluding to enforce unfair trading practices that tend to undermine “meritocracy” in any market they want to dominate or dominate through inappropriate practices. These laws also prohibit certain types of recognized commercial fraud, which by their very nature are designed to destroy competition in the market in which they are employed (the most notable culprits are bid-fixing, price-fixing and horizontal market sharing). The Sherman Act is the revolutionary law that prohibits antitrust behavior.

Courts can apply civil or criminal penalties, which can go up to 10 years in prison and a $1 million fine for each violation. Businesses can face a fine of up to $100 million. They can also expect a fine equal to twice the profits they have made from the illegal activity. The Clayton Act is an antitrust law that followed shortly after the Sherman Act and specifically identified certain prohibited behaviors. For example, the Clayton Act prohibits a mixed board of directors when a person makes business decisions for two or more competing companies. Specifically, antitrust laws serve to control and remedy the misappropriation and abuse of dominant positions. In particular, these laws prohibit two categories of conduct: (1) monopolization – that is, the application of “anti-competitive measures” to acquire, maintain or extend monopoly power in a given market; and 2) illegal trade restrictions – that is, conduct undertaken jointly by two or more independent actors that unfairly removes “performance competition” in a given market, resulting in higher prices, lower performance, lack of innovation or loss of choice. An example of behavior prohibited by antitrust laws is lowering the price in a specific geographic area to crowd out competition.