Business Laws…Effective or Not?
Chamberlain College of Nursing
BUSN115 Introduction to Business and Technology
Professor Tammy Lewis
Spring, 2014

Business Laws…Effective or Not?
The question this week that we are discussing is that the United States has several laws that are intended to further fair, balanced, and competitive business practices. Are such laws effective? If not, why? There are several laws in place such as the Sherman Antitrust Act, the Clayton Antitrust Act and the Federal Trade Commission Act. Anti-Trust laws limit what businesses can and cannot do to ensure that all competitors have an equal chance of succeeding. (Bovee and Thill p. 39). We will discuss each of these laws throughout the paper and hopefully answer the question that was originally asked.
The United States laws that are in place currently are typical effective as control measures to ensure fair business practices are followed. Determining the success or failure of specific legislation or regulations can be relative to what angle you are looking from. With anti-trust laws we are insured safeness from unreasonable trade, price discrimination and unfair and anti-competitive business practices.
The Sherman Anti-Trust Act In 1890, Congress enacted the Sherman Anti-Trust Act, which is a law designed to restore competition and free enterprise by breaking up monopolies. The Act of July 2, 1890 (Sherman Anti-Trust Act) states that: “This Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids, and allocate customers, which are punishable as criminal felonies.” (The Act of July 2, 1890 pg. 1) The original intention of the Sherman Antitrust Act was to protect consumers from big businesses that were using unscrupulous means to raise prices artificially, such as intentionally producing too few goods to meet consumer demand and thereby driving up the products' value and price. The United States Department of Justice says, “The principal law expressing our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers.”
The Clayton Anti-Trust Act The government had tried to keep the trade industries and consumers safe from being treated unfairly during business practices. So in 1914, Congress passed another law designed to bolster the Sherman Anti-trust Act: the Clayton Anti-trust Act. The Clayton Anti-trust Act defined more clearly what constituted illegal restraint of trade. Institute for International Economics states that: “The act outlawed price discrimination that gave certain buyers an advantage over others; forbade agreements in which manufacturers sell only to dealers who agree not to sell a rival manufacturer's products; and prohibited some types of mergers and other acts that could decrease competition.” (Pitofsky. pg 56)
The Federal Trade Commission Act Also, in 1914, Congress established the Federal Trade and Commission Act which supported the Sherman Anti-trust Act as well. The Federal Trade Commission Act established a government commission aimed at preventing unfair and anti-competitive business practices. The 2014 FDIC Compliance Manual States that: “To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.” (pg. VII–1.2)
Many more laws and regulations have been enacted since the 1930s to protect workers and consumers further. It is against the law for employers to discriminate in hiring on the basis of age, sex, race, or religious belief. Child labor generally is prohibited. Independent labor unions are guaranteed the right to organize, bargain, and strike. All these laws are put in place to help keep everyone safe and protected.
Conclusion
It is not always easy to define when a violation of antitrust laws occurs. Interpretations of the laws have varied, and analysts often disagree in assessing whether companies have gained so much power that they can interfere with the workings of the market. The United States Department of Justice says, “Effective antitrust enforcement requires public support. Public ignorance and apathy can weaken antitrust enforcement more than anything else. Whether you are a business person or a consumer, if you encounter business behavior that appears to violate the antitrust laws you should contact the enforcement authorities.” (pg. 5) What's more, conditions change, and corporate arrangements that appear to pose antitrust threats in one era may appear less threatening in another.
Whether consumers are shopping for food at the grocery store, buying a car, or downloading new software from the Internet, anti-trust laws play an important role in ensuring that people have the benefit of competitive prices and high quality goods and services. The anti-trust laws accomplish these goals by promoting and fostering competition in the marketplace and preventing anti-competitive mergers and business practices.

References
Act of July 2, 1. A.-T. (1890, July 2). Enrolled Acts and Resolutions of Congress, 1789-1992; General Records of the United States Government; Record Group 11. Retrieved from National Archives.: http://www.ourdocuments.gov/doc.php?flash=true&doc=51
An Antitrust Primer. (n.d.). Price Fixing, Bid Rigging, and Market Allocation Schemes: What They Are and What to Look For. Retrieved from justice.gov: http://www.justice.gov/atr/public/guidelines/211578.htm
Bovee, C. L. and Thill, J.V. (2013) Business in Action. Boston, MA: Pearson Learning Solutions.
FDIC Compliance Manual. (2014, January). Federal Trade Commission Act. Retrieved from fdic.gov: http://www.fdic.gov/regulations/compliance/manual/pdf/VII-1.1.pdf
McConnell, C. R., Brue, S. L., & Flynn, S. M. (2012). Economics: Principles, Problems, and Policies. (19 ed.). New York, NY: McGraw-Hill/Irwin
Pitofsky, E. M. (n.d.). Institute for International Economics. Retrieved from http://www.iie.com/publications/chapters_preview/56/7iie1664.pdf
U.S. Department of Justice. (n.d.). Antitrust Enforcement and the Consumer. Retrieved from justice.gov: http://www.justice.gov/atr/public/div_stats/antitrust-enfor-consumer.pdf