Free and open markets are the foundation of a dynamic economy. Aggressive competition between sellers in an open market offers consumers – individuals and businesses – the benefits of lower prices, better products and services, greater choice and greater innovation. The FTC`s competitive mission is to enforce the rules of the competitive marketplace – antitrust laws. These laws promote intense competition and protect consumers from anti-competitive mergers and business practices. The FTC`s Competition Bureau, in partnership with the Bureau of Economics, enforces antitrust laws for the benefit of consumers. To understand what „antitrust law“ is, it`s helpful to start with what is meant by „trust.“ In the late 1800s, the famous businessman John D. Rockefeller a number of large-scale companies he owned, under the control of the same group of „trustees“ to organize the various companies and gain more centralized control. Many large companies adopted this „trust system“ in the late 19th and early 20th centuries, and the term „trust“ was used to refer to these large companies or groups of companies. Among the various advantages of this type of business organization, companies often controlled the market for a particular product, from manufacturing to distribution to the final purchase by the consumer.
This dominance allowed these companies to push their competitors into bankruptcy and raise prices for consumers when there was no one left to compete with them. There were famous trusts in the oil, steel and tobacco industries, to name a few. The Competition Bureau has developed various resources to explain its work. For an overview of the types of issues examined by the Bureau, see Number of Competition Cases. This guide to antitrust laws provides a more in-depth discussion of competition issues for those with specific questions about antitrust laws. See the table below for fact sheets on various competition topics, along with case studies and frequently asked questions. In each section, you will find links to more detailed guides developed by the FTC and the U.S. Department of Justice. The attorney general`s role is to protect Michigan citizens by enforcing state and federal antitrust laws. The Attorney General investigates possible violations, combats illegal business practices, and promotes compliance with consumer protection and antitrust laws. The attorney general often works with attorneys general in other states and with the federal government to investigate and prosecute violations of state and federal antitrust laws.
Sometimes the attorney general also works with other states and the federal government to ensure that mergers don`t restrict competition and harm Michigan consumers (see answer to question #3 above). Pricing is one of the most common ways in which people and businesses violate antitrust laws. Pricing occurs when competitors agree on the amount they charge for a product or service. Just because many competitors seem to charge the same price for a product or service doesn`t mean they necessarily set prices illegally. Prices are often based on market conditions, and while a competitor may increase or decrease a price based on what someone else is asking for, this does not mean that both competitors have agreed to charge a specific price. This often happens, for example, at competing gas stations, as stations may increase or decrease their price because they have seen that the station across the street has done the same. Unless both stations have agreed to charge the same price for gasoline, this practice is not illegal. In order to alleviate the economic difficulties imposed on consumers in the abuse of their market power by these trusts, „antitrust laws“ have been created to prevent commercial practices used to reduce competition in the economic market. By preserving competition, antitrust law is designed to help consumers by encouraging businesses to compete for our business with better products and lower prices. Today, state and federal laws continue to help ensure a competitive economy and prevent unfair trade practices. Federal officials enforce federal antitrust laws.
Both the U.S. Department of Justice and the Federal Trade Commission conduct investigations and take enforcement action if they believe there has been a violation of federal antitrust law. Both organizations review mergers to ensure they are not anti-competitive, investigate potential antitrust violations, and file civil lawsuits against companies or individuals who violate antitrust laws. The Department of Justice also initiates criminal proceedings against individuals or companies for „serious and intentional“ violations of antitrust laws. For more information about the office`s work or to report an alleged violation of antitrust law, contact us. To learn more about the organization of the office and who to contact if you have a question about the contest, visit Inside BC. The Commission cannot represent individuals or companies and these funds are not intended to replace legal advice. Common violations include bid manipulation, pricing, monopolization, and resale prices.
In other cases, mergers can reduce the competitiveness of markets, which harms consumers by restricting choice and raising prices. When a merger is announced, federal and state authorities „review“ the merger very carefully to ensure that competition is not restricted. For example, federal and state agencies may examine the share of a market that the merged entity will control and whether the merged entity will result in less competition at the national level, in a particular state or even in a particular city. If federal or state authorities believe that a merger could restrict competition and harm consumers, they may ask the merged entity to sell parts of the business to a competitor (just to maintain market competitiveness). Sometimes federal or state agencies can file lawsuits to stop or cancel a merger. While it may seem that mergers allow large companies to become larger and charge consumers more, mergers can often be good for consumers and the economy. Indeed, the merged entity often becomes more efficient, allowing it to offer services to consumers at a lower price than if the two companies remained separate. In addition, companies sometimes struggle to operate independently, but when two companies merge, the larger company can become stronger. A „monopoly“ is a large corporation that controls most, if not all, of a product or service in a particular industry or geographic area. „Monopolization“ is the process by which a monopoly is created or maintained. With this power, the competitor can fully control a market price and exclude competitors, which usually leads to a price increase for consumers. It is not necessarily illegal to be a monopoly – sometimes monopolies are economically efficient and do not harm consumers.
Nor is it necessarily illegal to become a monopoly – a company can build a single product that dominates a market simply because it is a better product, not because the company has taken illegal steps to become a monopoly. However, companies sometimes take steps to maintain or maintain an illegal monopoly. Bid manipulation occurs when competitors enter into an agreement that results in a predetermined winner when a bid for a contract takes place. Competitors may agree to bid at a certain price so that the other competitor wins, or a contract may be tailored so that a particular company is predetermined to win a future bid. Both activities are illegal. Resale price maintenance is a term used to describe an agreement by which a manufacturer may require a store to sell its product at a certain price. If the store sells the product at a price lower than the price charged by the manufacturer, the manufacturer may decide that the store is no longer allowed to sell its product. Arrangements like these were illegal in themselves – that is, if a manufacturer provided for such a restriction on a company, it was automatically illegal.
Recent U.S. Supreme Court decisions emphasize that these types of agreements should be reviewed on a case-by-case basis to determine whether the agreement harms consumers. .