The Pros And Cons Of Antitrust Laws

Antitrust laws are a collection of federal and state laws that regulate the business practices of large companies in order to promote and protect fair competition within an open-market economy. These laws prevent businesses from taking part in unfair business activities such as, but not limited to, price fixing, market allocation, and bid rigging. Price fixing is when two or more competitors agree to each charge the same price for a product and not undercut each other. Market allocation is when competitors agree to divide markets among themselves, you stay out of my territory and I’ll stay out of yours. Bid rigging is when several businesses within a market agree to take turns winning and losing bids in order to maintain market control and prevent competition. As you can imagine, these unlawful business

The Sherman Act made it illegal for competitors to make agreements that would limit competition, this law also made it illegal for a business to operate as a monopoly if that business is not competing fairly. The Sherman Act succeeded in breaking up trusts but as business practices in America began to change companies found a new way to control price and production. Rather than forming trusts, competitors would unite into a single company, this new strategy to control price and production is called merging. Congress passed The Clayton Act in 1914 in order to combat this new business strategy, The Clayton Act helps protect consumers by banning mergers that are likely to significantly decrease competition. Also in 1914, Congress enacted the Federal Trade Commision Act (FTC) which created a federal agency to watchover markets and prevent unfair business practices from taking place. The FTC has the authority to investigate and stop unfair competition strategies and deceptive practices. Although these laws were enacted a long time ago, they continue to protect consumers and market