Business, Legal & Accounting Glossary
n. acts adopted by Congress to outlaw or restrict business practices considered to be monopolistic or which restrain interstate commerce.
The Sherman Antitrust Act of 1890 declared illegal “every contract, combination or conspiracy in restraint of trade or commerce” between states or foreign countries.
The Clayton Antitrust Act of 1914, amended by the Robinson-Patman Act of 1936, prohibits discrimination among customers through pricing and disallows mergers, acquisitions or takeovers of one firm by another if the effect will “substantially lessen competition.” Interstate commerce includes commerce within a state which affects the flow of that commerce, thus making it pretty broad. There are also some state laws against restraint of trade. The Antitrust Division of the U.S. Department of Justice enforces for the federal government, but private lawsuits to halt antitrust activities have become increasingly popular, particularly since attorney’s fees are awarded to the winning party. This is a legal speciality which has kept some industries relatively honest and made some lawyers wealthy.
Contractual arrangements between buyers and sellers and collusion between competitors qualify as restraint of trade under antitrust laws.
By preventing these practices, antitrust laws aim to promote fair competition and assure that the public will receive goods and services at market-determined prices. All industries, including manufacturing, distribution, transportation, and marketing, are subject to antitrust laws.
In 1914, Congress created the Federal Trade Commission to administer and enforce antitrust laws and also passed the Clayton Act of 1914, a major set of amendments to the original statute. Congress further amended U.S. antitrust laws with the Robinson-Patman Act of 1936.
The Department of Justice also has the authority to prosecute companies that break antitrust laws, and private parties are entitled to file civil lawsuits. Plaintiffs can collect triple damages if they prevail in litigation. Kodak in 1921 and 1954, Alcoa in 1937, and Microsoft in 1997 became targets of federal prosecution for violating antitrust laws.
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This glossary post was last updated: 5th May, 2020 | 5 Views.