A Primer On Antitrust Law Fundamentals

  1. OVERVIEW

  1. Antitrust Policy

    The basic objective of the antitrust laws is to eliminate practices that interfere with free competition. They are designed to promote a vigorous and competitive economy in which each business has a full opportunity to compete on the basis of price, quality, and service.

    "The Sherman Act was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade. It rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions. But even were that premise open to question, the policy unequivocally laid down by the Act is competition." Northern Pacific Railway v. United States, 356 U.S. 1, 4-5 (1958).

  2. The Principal Antitrust Statutes

    The principal federal antitrust statutes are the Sherman Act, the Federal Trade Commission Act, the Clayton Act, and the Robinson-Patman Act. The Sherman Act has particularly widespread application. The Sherman Act prohibits: Contracts, combinations, and conspiracies in restraint of trade. Sherman Act § 1 (15 U.S.C. § 1). Monopolization, attempts to monopolize, and conspiracies to monopolize. Sherman Act § 2 (15 U.S.C. § 2). Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45) contains two prohibitions: "Unfair methods of competition," which have been held to encompass not only all Sherman and Clayton Act violations, but also restraints of trade contrary to the policy or spirit of those laws. FTC v. Brown Shoe Co., 384 U.S. 316 (1966). "Unfair or deceptive acts or practices," which prohibits false or misleading advertisements or representations as well as practices which are "unfair" to consumers. FTC v. Sperry & Hutchinson Co., 405 U.S. 233 (1972). The Clayton Act (including the Robinson-Patman Act amendments) declares certain specific actions or practices to be illegal: Section 2 of the Clayton Act (popularly known as the Robinson-Patman Act) declares unlawful discrimination in prices between different purchasers in the sale of a commodity, where the discrimination may lessen competition. 15 U.S.C. § 13. Section 3 of the Clayton Act prohibits exclusive dealing arrangements, tying arrangements and requirements contracts involving the sale of commodities, where the effect may be to substantially lessen competition. 15 U.S.C. § 14. Section 7 of the Clayton Act prohibits mergers, joint ventures, consolidations, or acquisitions of stock or assets where the effect may be to substantially lessen competition or tend to create a monopoly. 15 U.S.C. § 18. C. Enforcement and Penalties

    The federal antitrust laws are enforced by the Antitrust Division of the Department of Justice, by the Federal Trade Commission, and by suits brought by private parties. States can be private parties for purposes of federal antitrust law. In addition, states have their own antitrust laws. The Department of Justice has responsibility for enforcement of the Sherman Act (under which it can bring criminal or civil actions and recover damages suffered by the United States Government) and the Clayton Act (under which it can obtain civil injunctions and recover damages suffered by the United States Government). Criminal violations of the Sherman Act are felonies punishable by imprisonment for up to ten years and/or fines of up to $1,000,000 for individuals and $100 million for corporations per violation. Under an alternative provision, a defendant may be fined up to twice the gross gain or twice the gross loss if any person derives pecuniary gain from the offenses or if the offense results in pecuniary loss to a person other than the defendant. Department of Justice enforcement actions, either civil or criminal, are brought in federal district courts. The Federal Trade Commission and the Antitrust Division jointly must be notified of certain proposed mergers, acquisitions, joint ventures and tender offers. The Federal Trade Commission is responsible for enforcement of the Federal Trade Commission Act and, with the Department of Justice, the Clayton Act, as well as numerous other specific statutes dealing primarily with such matters as product labeling, consumer credit, and consumer warranties. Commission enforcement proceedings are brought in an administrative setting: a trial is held before an Administrative Law Judge with a right of appeal by either the Commission staff (the Complaint Counsel) or the party sued (the Respondent) to the full Commission. Commission decisions adverse to the Respondent can be...

To continue reading

FREE SIGN UP