Antitrust Laws and Competitive Business Practices
The fair, balanced and competitive application of U.S. laws as applied to business practices

Introduction Several laws have been enacted to provide protection to businesses in our free-trade market. There are times when trading within the free market does not demonstrate the fair, balanced and ethical conduct deserved in competitive business. Trying to compete in a market where practices aren’t regulated deprives businesses the benefits of competition, resulting in higher prices for products and services which in turn affect the economy. Unfair trade practices have been around for as long as trade itself. Unfair practices were under scrutiny as early as 470 B.C. Grain was so vital to Greece’s population that trade laws were enacted. A percentage of grain was taken by the state therefore taxes were applied to anyone not importing directly to Athens. Death applied to anyone restricting imports (http://www.ancient.eu/article/115/). The latter was definitely extreme but regulations now cover a broader range of violations with less severe consequences. The federal government enforces three major antitrust laws. These laws address unfair practices that deprive businesses the benefits of interstate and international trade. Federal antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing.

The Sherman Antitrust Act Passed on July 2, 1890, the Sherman Antitrust Act was the first major legislation passed to address the business practices associated with oppressive monopolies. It was named for Senator John Sherman of Ohio, who was Secretary of the Treasury under President Hayes. The Sherman Antitrust Act is a federal law prohibiting any contract, trust, or conspiracy from participating in the restraint of interstate or foreign trade. Similar laws had been passed in several states but only applied to intrastate businesses. It includes felony charges for agreements among competitors to fix prices, rig bids, and allocate customers (http://www.ourdocuments.gov/doc.php?flash=true&doc=51). McNeese (2008) wrote that during the decades following the Civil War, the United States experienced expansive growth throughout its economy. As a result, a new class of business leaders was born. Some considered them mighty titans of industry, while to others they were greedy robber barons. Delorenzo (2005) stated that the “robber barons” of the late nineteenth and early twentieth centuries took advantage of political entrepreneurship or neomercantilism . This is the practice in which success is achieved primarily by influencing government to subsidize businesses or to enact legislation and regulation that harms competitors. Observers called for reform as the robber barons’ self-serving business practices and monopolies came into question. Even though the Sherman Act is over 100 years old it still has its place in modern business. AT&T had a history reaching back to 1877 and was a highly profitable company. Commonly known as Ma Bell, the communications giant, as a government-supported monopoly, lost its government backing in the 1980s when charges were filed against it under the Sherman Act (http://www.thenewamerican.com/economy/sectors/item/4297-the-breakup-of-ma-bell). In the late 1990s, in another effort to ensure a competitive free market system, the Federal Government used the Sherman Act against the giant Microsoft computer software company (http://www.ourdocuments.gov/doc.php?flash=true&doc=51). I believe the Sherman Antitrust Act was extremely effective especially in when giving the government the power to control and dissolve monopolies. Like most laws, the Sherman Antitrust Act has been expanded by court rulings and other legislative amendments since its passage. One such amendment came in the form of the Clayton Act.

The Clayton Act In the 1912 presidential election it was believed that Congress had been too lenient with corporations in regards to the Sherman Antitrust Act of 1890. When Woodrow Wilson won the election he instructed that Congress draft legislation to strengthen the antitrust laws. The Clayton Act was passed in 1914 as an amendment to the Sherman Act, adding detailed provisions in the form of civil statutes to strengthen actions against unfair competition. Mainly to challenge mergers that increased price to consumers. It provided provisions that prohibits mergers or acquisitions that are likely to lessen competition. To further prevent anticompetitive mergers this act too allowed unions to organize. Also notification was required to both the Antitrust Division and the Federal Trade Commission for persons considering a merger or acquisition above a certain size (http://www.antitrustlaws.org/Clayton-Act.html). The Clayton Act was originally enacted to allow for the refusal of human labor as a commodity or an article of commerce therefore exempting unions from the scope of antitrust laws. Currently it is primarily used to prohibit suppression of free competition. This includes practices such as price discrimination, tying and exclusive dealing contracts, the acquisition of competing companies by one company; and interlocking directorates (http://lawbrain.com/wiki/Clayton_Act). I feel that the Clayton Act promotes free trade, giving consumers more power and prohibiting actions harmful to competition. I believe this was an excellent supplemental law strengthening the advantage of consumers and smaller businesses.

The Federal Trade Commission Act Congress passed the Federal Trade Commission Act in 1914 to protect consumers from unfair methods of competition. This also allowed for the formation of a bipartisan body known as the Federal Trade Commission to enforce violations of the act. Within the provisions of this act the Federal Trade Commission is allowed the ability to prevent and enforce many violations concerning businesses and consumers. A few of the major powers include the prevention and investigation of unfair methods in regards to commerce and competition, requiring restitution to consumers who are victims of unfair practices, defining trade regulations, and reporting legislative recommendations to Congress. A business may also be liable for the unfair and deceptive acts of its employees, agents, or representative. Original problems addressed by the Federal Trade Commission Act concerned mainly oppressive monopolies and anti-trust violations. In recent years though, the rise of identity theft and electronic privacy issues have become growing consumer and business protection issues (http://business-law.freeadvice.com/business-law/trade_regulation/federal_trade.htm). I believe the effectiveness of the FTCA is evident in that the law does not require that an actual deception take place. The law only requires the possible likelihood of consumer deception to be considered unfair.

Conclusion As stated in the Department of Justice pamphlet “Antitrust Enforcement and the Consumer” other laws are also used to fight illegal activities. These include laws prohibiting obstruction of justice, false statements to Federal agencies, perjury, and conspiracies to defraud the United States including mail and wire fraud. Punishments including fines and imprisonment can accompany each of these crimes, which may be added to the fines and imprisonment terms for antitrust law violations (http://www.justice.gov/atr/public/div_stats/antitrust-enfor-consumer.pdf). I believe the implementation of antitrust laws have been successful, promoting healthy competition in an effort to keep marketplace economics working properly. As other forms of abuse arise through advances in technology and information exchange, amendments and new laws will be enacted providing increased oversight to the accessibility of secure data.

References

1. Adelmann, B. (2010). The Breakup of Ma Bell. Retrieved from http://www.thenewamerican.com/economy/sectors/item/4297-the-breakup-of-ma-bell

2. Antitrustlaws.org (2014). The Clayton Act works with the Sherman Act to Improve Business Practices. Retrieved from http://www.antitrustlaws.org/Clayton-Act.html

3. Cartwright, M. (2012). Ancient History Encyclopedia: Trade in Ancient Greece. Retrieved from http://www.ancient.eu/article/115/