Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex legal requirements.
Antitrust litigation can be initiated by state and federal regulators. Private parties can also initiate these cases. It can result in costly financial penalties and even criminal sanctions. To avoid liability while remaining competitive, businesses must understand what types of actions can result in violations. Understanding antitrust violation examples helps companies stay compliant with antitrust litigation requirements.
Federal Antitrust Law
The goal of federal antitrust laws is to curb business efforts to reduce competition. They also prevent the creation or maintenance of monopolies. The United States enacted its first antitrust law in 1880.
The Sherman Act prohibits all agreements and conspiracies in restraint of interstate trade and commerce. This includes price fixing, market allocations, boycotts, and bid rigging.
The Clayton Act
Another federal statute, the Clayton Act, prohibits mergers and certain exclusive dealing arrangements. It also prohibits price discrimination that may substantially reduce competition or create a monopoly. The Clayton Act was amended in 1976 by the Hart-Scott-Rodino Antitrust Improvements Act. This amendment requires companies planning large mergers or acquisitions to notify the government in advance.
The Federal Trade Commission Act
The Federal Trade Commission Act (FTC Act) established the Federal Trade Commission (FTC). The FTC enforces antitrust laws and consumer protection regulations. The FTC Act prohibits "unfair methods of competition" and "unfair or deceptive acts or practices."
State Antitrust Law
Most states have their own antitrust laws that govern conduct within their borders. Like their federal counterparts, the goal is to promote competition and prevent anti-competitive behavior. The majority of state antitrust laws are modeled after the Sherman Act.
For instance, New York's primary antitrust law, the Donnelly Act, mirrors the Sherman Act. However, because each state has its own legal regime, it is important to understand the laws. Businesses must know the antitrust laws of all states in which they operate. Business litigation and contract disputes often arise when companies face antitrust enforcement actions or regulatory challenges.
Enforcement of Antitrust Laws
The Department of Justice (DOJ) is tasked with enforcing both the Sherman Act and the Clayton Act. The DOJ may do so through both civil and criminal proceedings. Most DOJ cases involve civil enforcement. Criminal prosecutions are typically limited to intentional and clear violations. These include price fixing and bid rigging.
The Sherman Act imposes criminal penalties of up to $100 million for a corporation. Individual penalties can reach $1 million, along with up to 10 years in prison.
Federal Trade Commission Enforcement
The Federal Trade Commission (FTC) can also investigate and bring civil suits against businesses. These suits target violations of federal antitrust laws. Under U.S. Supreme Court precedent, all violations of the Sherman Act also violate the FTC Act.
So, while the FTC does not technically enforce the Sherman Act, it can bring cases under the FTC Act. These cases target the same types of conduct that violate the Sherman Act. The FTC typically focuses its enforcement on industries impacting consumers. These include technology, healthcare, pharmaceuticals, and communications. The DOJ has exclusive enforcement authority over other sectors. These include telecommunications, banks, railroads, and airlines.
State and Private Enforcement
State attorneys general and private citizens also have the ability to pursue certain violations. These officials can bring federal antitrust litigation on behalf of individuals residing within their states. They can also act on behalf of the state as a purchaser. Additionally, they may bring an action to enforce the state's own antitrust laws.
Private parties can also initiate antitrust law cases. The majority of suits are brought by businesses and individuals seeking damages. These seek damages for violations of the Sherman or Clayton Act. Private parties can also seek court injunctions preventing anticompetitive conduct. They can bring suits under state antitrust laws. Civil litigation process becomes important for private parties pursuing antitrust claims through the court system.
Antitrust Violation Examples
Federal and state antitrust laws prohibit numerous actions that are considered anticompetitive. Below are some common antitrust violation examples:
Bid-Rigging
Independent competitors don't actually compete with each other when bidding on public contracts. Rather, they agree to submit bids in a coordinated way. This artificially inflates the price obtained by the winning bidder. Specific types of bid-rigging include bid suppression, complementary bidding, and bid rotation.
Group Boycotting
Competitors agree to boycott a certain entity with a specific goal. The goal is preventing new competitors from entering the market. It can also put existing competitors at a disadvantage.
Price-Fixing
Companies that would usually compete with each other agree to set their prices together. They sell the same product or service but coordinate pricing. This typically results in maximum profit and unfair pricing for consumers.
Monopolization
A monopoly occurs when a business has exclusive control over a good or service. This control exists in a particular market. Not all monopolies are illegal. However, establishing or maintaining a monopoly through anticompetitive actions constitutes illegal monopolization.
Anticompetitive Mergers
Mergers are considered anticompetitive where the effect "may be substantially to lessen competition." They may also "tend to create a monopoly."
Market Division Schemes
Market division schemes are also referred to as customer allocation schemes. These occur when companies divide markets amongst themselves. They may divide products, customers, or territories. Each company is typically given an exclusive market.
Notably, antitrust laws, including the Sherman Act, do not prohibit every restraint of trade. They only prohibit those that are unreasonable. However, certain conduct is considered so harmful to competition that it constitutes violations. These include bid rigging and market division. These are considered "per se" violations of the Sherman Act. What are white collar crimes includes criminal antitrust violations, which can result in significant penalties and prison time for individuals.
Consult With an Experienced Antitrust Attorney
Scarinci Hollenbeck's Business Torts & Anti-Trust Practice Group represents clients in a wide range of matters. These matters involve antitrust litigation. Relying on decades of experience, our attorneys help clients minimize legal risks. They also help clients take full advantage of key business opportunities.
Our antitrust attorneys have experience handling a wide-range of matters. This includes advising on antitrust issues arising from mergers, acquisitions and joint ventures. We also develop antitrust compliance programs. Our team obtains antitrust merger clearances under the Hart-Scott Rodino Act and other regulations. We represent subjects and targets in antitrust investigations. We engage in antitrust litigation when necessary.
Our clients also come from nearly every industry. We frequently serve clients in the healthcare, pharmaceutical, financial services, and technology sectors. We also serve consumer products, manufacturing, energy, entertainment, insurance, media, and transportation sectors. Our industry knowledge allows us to provide practical legal advice. This advice coincides with your business objectives.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
