Because the field of Business Law is so great, this paper will examine a single aspect of Business Law, that of antitrust action. Specifically, as it is applied to Microsoft, antitrust litigation is raising eyebrows in both the legal and business worlds.
There is a hue and cry that antitrust laws as they exist today have outlived their usefulness when applied to cyber commodities and artificial intelligence. This paper will present those opposing viewpoints and attempt to answer the question: are laws wrought in the industrial age applicable to today’s technology? And if so, is the antitrust challenge to Microsoft the tip of the iceberg in Business Law reformation?
Antitrust Law
Antitrust law attempts to ensure that market competition is protected from an organization or cartel with a monopoly on a given product. Much of antitrust enforcement tries to create a balance between the benefits of coordination and consolidation, such as efficiencies that reduce price or improve quality, and the detriments of market power that can lead to higher prices or reduced innovation.
Corporate trusts grew rapidly in the US from 1880 to 1905, creating the atmosphere for President Theodore Roosevelt to launch his now famous trust busting campaigns. The era of antitrust legislation stems from the Sherman Act of 1890. The antitrust laws were based on the constitutional power of Congress to regulate interstate commerce. It declared illegal every contract, combination, or conspiracy in restraint of interstate and foreign trade. The Sherman Act makes monopolization illegal. The two elements of monopolization are: "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of the power as distinguished from growth or development as a consequence of a superior product, business acumen, or historical accident." 1 The Sherman Act was designed to eliminate restraints on trade and competition. It is the main source of antitrust law.
While the Sherman Act provided protection against monopolies, Congress determined that it wasn’t quite comprehensive in its’ self. It was supplemented in 1914 by the Clayton Antitrust Act, which prohibited exclusive sales contracts, inter-corporate stockholdings, and unfair price-cutting to freeze out competitors. The Clayton Act of
Seal Straugh 1914 makes price discrimination illegal, forbids tying arrangements involving only goods and makes anti-competitive mergers and acquisitions illegal. The Sherman and Clayton Antitrust Acts were made to promote competition between companies making similar products.
Unfortunately, these monopolies allowed companies to raise prices without consequence, as there was no other source of product for consumers to buy for cheaper. The more competition, the more a company is forced to appeal to the consumer, but monopolies allowed corporations to treat consumers awfully and still receive their business. Trusts were bad for both the consumers and the workers, but without proper representation, they could do nothing. However, with petitions, citizens got the first anti-trust law passed by the not entirely corrupt Congress, called the Sherman Act of 1890. It prevented companies from trade cooperation of any kind, whether good or bad. Most corporate lawyers were able to find loopholes in the law, and it was largely ineffective. Over time, the Sherman Anti-Trust Act of 1890, and the previously passed Interstate Commerce Act of 1887, which regulated railroad rates, grew more slightly effective, but it would take more to cripple powerful
“Processor Editorial Article - Antitrust Laws: Not Just For The Big Boys.” Editorial.Processor 19 Nov. 2004: 27+. Processor.com. Web. 29 Nov. 2011 .
United States has several laws that ensure that competition among businesses flow rely and new competitors get free access to the market. These laws intend to ensure fair and balanced competitive business practices. However, there are times when some businesses will do anything to gain competitive edge. USA has strong antitrust laws that prohibit fixing market price, price discrimination, conspiring boycott, monopolizing, and adopting unfair business practices. The history of Antitrust laws goes back to 1890 when Congress passed Sherman Act. In 1914, Congress passed two more acts: Federal Trade Commission Act, and Clayton Act. With some revisions, these three acts are still core antitrust acts.
...he government to the ordinary people as explained in July 5, 1892 by the Omaha Morning World –Herald (Doc F). Lastly, the laws for the regulation of businesses was enforces until President Theodore Roosevelt had also contributed by suing companies that violated the Sherman Anti-Trust Act.
I am interested in how corporate and finance laws are implemented and how much government is involved in business. This case involves with monopolies in the motion pictures industry. As learned in APUSH, the motion pictures industry was extremely popular during the twentieth century and there was a lot of news surrounding that area of American life. I had originally had chosen the court case Gibbons v. Ogden (1824), which also had to do with monopolies, but there wasn’t any antitrust laws during that time period to research. That was the first time monopolies were challenged in court. Over a hundred years later, the monopoly of the movie production industry was challenged through the same idea of antitrust. The topic of monopolies and trusts even plays an important role in society today as it shapes government regul...
This forced industrialists and monopolistic corporations to consider public opinion when making business decisions, which benefited the consumer and helped grow the economy. One way that Wilson and Roosevelt tried protecting these smaller businesses was by removing trusts that were much bigger than they were. Under Wilson’s authority in 1814, the Clayton Anti-trust Act was passed, which abolished interlocking directorates. This law was passed as an amendment to clarify and supplement the Sherman Antitrust Act of 1890. When Roosevelt became president in 1901, he demanded a “Square Deal” that would address his principal concerns for the era- the three C’s: control of corporations, consumer protection, and conservation.... ...
middle of paper ... ... Also, some railroads gave special rates to some shippers in exchange that the shippers continued doing business with the railroad company. In the Clayton Antitrust Act, it said no one in commerce could regulate rates of price between different buyers (Document E). It said that otherwise, this would create a monopoly in any line of commerce. However, the Elkins Act of 1903 pushed heavy fines on the companies that did that.
Anti-trust laws are laws which prohibit anti-competitive behavior and unfair business practices. Their purpose is to make sure that businesses and consumers cannot be abused by powerful firms that hold or wish to hold a monopoly in the market. They also take into account certain ethical standards, and therefore can be considered quite subjective. Many specific strategies are outlawed by anti-trust laws, including price fixing (agreement on prices of uniform goods or services), predatory pricing (setting a low price in order to knock off competitors), and vendor lock-in (virtually forcing a consumer to buy from a certain supplier).
Which had made him the happiest he had been in his public service. He made improvements to make the Supreme Court of the United States more efficient, which fell far behind. He wrote 253 opinions, or around one-sixth of all the decisions given to him during his term. His influence on the Supreme Court was helpful in securing the passage of the Judge’s Act of 1925, which gave more options in choosing cases so it could focus more of their attention on questions about the constitution and other national importances. Most of Taft’s decisions were cautious and constraining of the government. According to the Miller Center, In Truax v. Corrigan, for example, he struck down the provision of the Clayton Anti-Trust Act which barred injunctions against labor picketing. He reasoned that even peaceful picketing may violate the Fourteenth Amendment in depriving business owners of their property without the due process of law. He also ruled against the right of Congress to discourage child labor by levying an excise tax on goods manufactured by children (Bailey v. Drexel Furniture Co.) However, in at least one instance Taft had an opportunity to expand the
Since this debate still rages on, many people argue both sides of the story of the pros and cons. Many would argue that not breaking up monopolies actually increase the competition of companies that are attempting to break into some of the market share that the monopoly already has, more so than the free market that exists now. Proponents of the Sherman Anti-Trust act argue that “absolute power corrupts absolutely” (Martin, 1996) as originally quoted by Baron Acton. The idea that no competition within the business world establishes no risk and reward that is all part of the entrepreneur spirit of the U.S. spirit.
The dissolution of Standard Oil marked an important turning point in history for its adding of regulation against monopolies. The Sherman Anti-Trust Act, which brought an end to this excessive restraint by the company, allowed the Federal government to hold cases against trusts such as the one Standard Oil had. This turning point was the beginning of regulation against restraint or monopolies by other businesses.
Competition law in the European Union has developed from being an uncertain preoccupation of a few economists, lawyers and officials to one of the leading competition law system in the globe. Nonetheless, in agreement with most commentators, there are inherent flaws within the EU Commission’s procedures. This paper aims to provide an account of concerns in the current system, drawing comments from scholars and EU officials in order to demonstrate both benefits and shortcomings of the system. An overview of the legal and policy debate of the current EU Competition enforcement will be presented as the introduction. Policy concerns such as prosecutorial bias and self-incrimination in enforcement powers will be the main subjects for the purpose of this paper, followed by analysis of the EU commission structure, in particular checks and balances and the hearing process, both of which have been claimed being incompatible with the ECHR. A comparison with the US Antitrust system will also be paralleled through out this essay in order to demonstrate a clearer examination. This essay will conclude with the Commission’s flaws that have effected on the upcoming UK competition law reforms.
Predatory pricing “is alleged to occur when a firm sets a price for its product that is below some measure of cost and forfeits revenues in the short run to put competitors out of business” (Sheffet p.163-164). The reason firms take the short term loss is because they hope to drive out competitors and raise prices to monopolistic levels. By doing this, they covered their short term loss to make even greater profits in the long term than they would have by not using predatory tactics (Sheffert). Predatory pricing became illegal under Section 2 of the Sherman Act. It has remained one of the more difficult allegations for prosecutors to prove, due to the complexity of determining the company’s actual intent and whether or not it the strategy is competitive pricing. According to Areeda and Turner, there are three ways to determine if a firm is implementing predatory pricing. First, a price above marginal cost is presumed lawful; second, a price below marginal cost is considered unlawful, except when there is strong demand; and third, average variable cost is considered a good proxy for marginal cost. This is a reason predatory pricing is still important today. The courts must decide whether or not companies are engaging in competitive prices for the good of the consumers or are using predatory tactics for the good of their own company. The purpose of this paper is to focus on the current legislation regarding predatory pricing, determining when there is predation in an industry and the cause and effect relationship it has on an industry.
There are laws in place, by the federal government, to ensure there is fair competition among businesses. The laws create fairness through: prevention of monopolies, trade regulations, production ethics, and fixed and pricing. The significant anti-trust laws are: Federal Trade and Commission, Clayton Anti-trust act, Celler Kefauver act, and Sherman Anti-trust act.
Acts of unfair competition are generally characterized by deception, bad faith, fraud or oppression, or as against public policy because of their tendency to unduly hinder competition. Unfair competition laws have been established to protect consumers and businesses and help prevent illegal merchandizing.” Kane, S. (n.d)