Table of Contents
The antitrust law set to ensure that there is fair business in the market, the rights of the consumers are protected, and that monopolistic systems do not come over the open and free market, is at times difficult to comprehend (Black, 2005). This, particularly, has been happening since the law, as indicated by critics such as Milton Friedman, a free market economist, had gone against the principles of true free and open markets by factoring in regulation. Thomas Sowell also argues that
In short, the financial demise of a competitor is not the same as getting rid of competition. The courts have long paid lip service to the distinction that economists make between competition—a set of economic conditions—and existing competitors, though it is hard to see how much difference that has made in judicial decisions. Too often, it seems, if you have hurt competitors, then you have hurt competition, as far as the judges are concerned… (Sowell, 2006)
On the contrary, the United States Department of Justice is keen on ensuring that every felony, in this case violation of the antitrust act, is persecuted. In a ruling, the following is stated:
“Every violation of the antitrust laws is a blow to the free-enterprise system envisaged by Congress. This system depends on strong competition for its health and vigor, and strong competition depends, in turn, on compliance with antitrust legislation. In enacting these laws, Congress had many means at its disposal to penalize violators. It could have, for example, required violators to compensate federal, state, and local governments for the estimated damage to their respective economies caused by the violations. But, this remedy was not selected. Instead, Congress chose to permit all persons to sue to recover three times their actual damages every time they were injured in their business or property by an antitrust violation” (Hawaii v. standard oil co. of California, 1972).
Companies should, therefore, ensure that they are keen in their everyday activities and business transactions, and they do not fall prey to the antitrust act. The following guidelines could be used in steering out from the arms of the law:
Raise any transaction between the competitors, fix, peg or stabilize any form of price at its minimum and maximum, otherwise the common pricing system should be discouraged as it goes against the Sherman Act (McConnell & Brue, 2005).
Actions that could put a company in such a situation include making agreements that affect prices. For instance, in the formulation of a given product, if one spoke to a competitor either in passing or intentionally that a given composite is cheaper than another and will reduce the production cost of the product, this would be considered as felony as it would finally reduce the price of the good and the two competitors could take advantage of the market patterns.
While bidding, competitors are required to be as honest as they could be. Any kind of arrangements to tilt the bid so that it favors one of the competitors is considered as felony. For instance, in an auction, a given competitor wants to have a low bid status in order to make a point concerning a different business transaction. The competitor then asks another competitor to submit a high bid. This action is considered a bid-rigging and is punishable by the law (McConnell & Brue, 2005).
As dictating terms that will affect the product prices is not allowed, so is dictating of the after sale terms. The latter include: delivery terms, warranties, discounts, surcharges, rebates, service delivery and other factors. Such decisions should be made independently, otherwise it will be taken that the competitors cooperate to create a form of monopoly. It then follows that in the event there is an announcement that a certain price is reasonable, the business should overlook such announcements and use its own pricing strategies to come up with an independent price (McEwin, 2003).
The Allocation of Customers
Market share is a critical factor in business. As it is every business’ objective to make profit, so it is every markers’ objective to capture as much market share as they possibly could. The antitrust act, however, prohibits competitors from coming up with synergistic strategies (McEwin, 2003).
For instance, the business should not lies with another business so that there is geographical distribution between it and its competitor. In addition, it should not, together with its competitor group the market in terms of target markets and split the two between themselves. Instead, competition and innovation should be encouraged at all levels, those are the principles of antitrust laws, and such is the free market that the laws seek to create (McConnell & Brue, 2005).
Communication Between Competitors
It is inevitable that competitors exchange information; but how that information affects the markets is what would sometimes lead to court intervention. The information shared could either be useful or incriminating to the two competitors. It is, therefore, important that the business withholds sensitive information from their competitors while communicating (Black, 2005).
The sensitive information that could be shared includes details on the credit status of the company. Disclosing of such information may lead to requisition for mergers and become the ground for unfair competition. It is advised that if the sensitive information needs to be shared, it should be done in the presence of legal counsel to avoid being implicated for restraint of trade (Black, 2005).
Trade associations are formed to facilitate certain trade functions such as ensuring fair trade and protect the traders and other participants from the entities gone beyond the verge of their powers. While at it, trade organizations may opt to selectively have a set of suppliers or customers in order to facilitate the attainment of their objectives, which is strictly prohibited through the antitrust laws. The business should, therefore, ensure that it keeps itself abreast of the activities of its association, in case they get involved in any kind of activity that would implicate them (McConnell & Brue, 2005).
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Boycotts refer to a concerted refusal to perform a given activity. For instance, a group of businesses, finding out that a set of traders are doing unfair business, may altogether decide to do away with the group of traders. Such move is a violation of the antitrust law, since it may be viewed as an intentional move to outcompete the traders in the industry.
Equally, competitors may not synergistically refuse to provide a good or product to a given target group in the market (McEwin, 2003). E.g., in a given state where the majority is against same sex marriages, the players in business cannot concertedly decide to threaten the existence of the minority group by refusing to offer their services. Even if this may seem to be the logical thing to do, it is punishable by the law.
“Customer is king,” this seems to be the agreeable statement to say. There are many ways a business could get caught while going against the antitrust laws. All in all, it helps to ensure that nearly the whole population is guided from possible oppression coming from the high and mighty, monopolistic players in the industry. By taking proper precaution, business can always remain as good as new.