What Are Antitrust Laws?

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Antitrust Laws: Overview

Antitrust laws, sometimes called competition laws, prohibit businesses from engaging in unfair practices that take advantage of consumers and employees. These laws can apply to almost any industry and all have the same goal: to protect consumers from unfair business practices and to ensure high quality but low prices.

Many types of behaviors are prohibited under antitrust laws, including market allocation, bid rigging, price fixing, monopolies, and unfair mergers/acquisitions.

Market allocation refers to agreements between companies that keep certain regions under the control of one business while other regions are under the control of another business. This may also be called a regional monopoly and is unfair because it ensures that one business has a monopoly over an area, even if it is not on a nationwide scale.

Similarly, monopolies refer to one company that dominates an industry or sector. When a company has a monopoly, it is nearly impossible for other companies to enter the market or maintain a profit. Monopolies can be caused by exclusive supply agreements, tying the sale of two products, predatory pricing, and refusal to deal.

Bid rigging refers to businesses conspiring together to will a contract. Bids are determined beforehand which allows a predetermined winner to secure the contract artificially. Bid rigging can include bid suppression, complementary bidding, and bid rotation.

Price fixing occurs when companies conspire together to artificially raise the prices of certain products or services. Because suppliers in these situations are all charging a higher price for the same item, consumers have no choice but to pay more than they should.

Mergers and acquisitions are not inherently unlawful, but they can be in violation of antitrust laws if they are found to eliminate competition, affect supplies, and prevent entry into the market.

According to the Department of Justice, the three main federal antitrust laws are:

1. The Sherman Anti-Trust Act: outlaws “contract, combination or conspiracy in restraint of trade,” and “monopolization attempted monopolization or conspiracy or combination to monopolize.” This act includes protections against price fixing, rigged bids, and market allocation.
2. The Federal Trade Commission Act: generally aims to prevent “unfair methods of competition” and “unfair or deceptive acts or practices.” This act can cover the same anti-trust violations as the Sherman Anti-Trust Act but is enforced by the Federal Trade Commission (FTC).
3. The Clayton Antitrust Act: specifically prohibits unfair mergers and acquisitions. This law allows the federal government to challenge mergers which they believe will lessen competition and increase prices for consumers.

Antitrust Lawsuits

A wide number of industries may end up in an antitrust lawsuit. As long as businesses are found to have made unfair business choices, a consumer may be able to file an antitrust lawsuit.

Recently, plaintiffs have filed lawsuits against German automakers claiming that the companies violated antitrust laws by sharing market information and entering into unlawful agreements. These allegations were prompted by European investigation findings which show that Audi, BMW, Mercedes, Porsche or Volkswagen may have conspired together regarding their diesel vehicle strategies.

Antitrust Settlements

Antitrust laws can result in lucrative settlement and trial verdicts, should lawsuits go through the full legal process. In 2019, Luxottica agreed to a class action settlement with consumers to resolve claims that 1-800 Contacts and other companies colluded to reduce contact lens competition. 1-800 Contacts paid $7 million to resolve the same claims in 2017.

Qualified Antitrust Lawyers

An attorney who is experienced in antitrust laws can help you understand how your rights may be infringed upon by selfish and unlawful business choices. A lawyer will be able to determine if you have a legal case against businesses and whether or not you can take legal action against offending companies.