The United States Federal antitrust laws is defined under several statutes, as well as by leading judicial precedents. There are three statutes particularly that have shaped the field: the Sherman Antitrust Act, the Clayton Antitrust Acts and the Federal Trade Commission Act. These acts assist in fair and leveled competition that keeps the price of your utility bill, eggs and sugar down. Antitrust laws touches virtually all areas of business and the economy.
This body of law, establishes competition and economic principles of free trade, seeks to ensure that corporations compete fairly by banning price-fixing schemes, monopolies and other acts that restrain healthy competition vital to a free market economy. The Sherman Antitrust Act in 1890 was passed to encourage free trade and fair competition. The Federal Trade Commission was created to prevent the use of unfair techniques to compete. While many corporations will do almost anything to gain upper-hand on the competition, it is very important to fully understand antitrust laws so that an individual do not risk their companies’ integrity while gaining customers. Antitrust laws make it illegal to secretly to restrain trade or commerce in any industry, regardless of size.
Often time’s small businesses fall victim to the unfair business practices of larger businesses, those businesses can be prosecuted for unfairly controlling markets localized in neighborhoods, towns, or cities. The Sherman Act The first federal statute created to control of trade and monopolization was the Sherman Antitrust Act of 1890, signed into law by President Benjamin Harrison. The Sherman Antitrust Act is the first law passed by the U.S. Congress to prohibit trusts. It was named after an Ohio Senator John Sherman, who was at the time chairman of the Senate finance committee and the Secretary of the Treasury under President Hayes.
Many other states have passed similar laws, but they were limited to intrastate businesses. The Sherman Antitrust Act was based on the constitutional power of Congress to regulate interstate commerce. According to the United States Department of Justice the Sherman Antitrust 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 Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct. The Act, however, is not violated simply when one firm’s vigorous competition and lower prices take sales from its less efficient competitors; in that case, competition is working properly (Antitrust laws and you n.d.). The Clayton Act Clayton Antitrust Act, 1914, passed by the U.S. Congress as an amendment to clarify and supplement the Sherman Antitrust Act of 1890. In the 1912 presidential election all three political parties believed that Congress has been too soft with corporations with the Sherman Act of 1890. When Democratic nominee, Woodrow Wilson, won the election he encouraged Congress to draft legislation to toughen the antitrust laws. In 1914, it was drafted by Henry De Lamar Clayton. The Clayton Antitrust Act of 1914 sought greater details in its prohibitions of the more broad language of the Sherman Act. In reference to the United States Department of Justice, the Clayton Act is a civil statute (carrying no criminal penalties) that prohibits mergers or acquisitions that are likely to lessen competition. Under this Act, the Government challenges those mergers that are likely to increase prices to consumers. All persons considering a merger or acquisition above a certain size must notify both the Antitrust Division and the Federal Trade Commission.
The Act also prohibits other business practices that may harm competition under certain circumstances (Antitrust laws and you n.d.). Under the Clayton Act private parties can sue for triple damages when they have been harmed by conduct that violates either the Clayton or Sherman Act and to obtain a court order prohibiting the anticompetitive practice in the future. The Federal Trade Commission Act President Woodrow Wilson signed the Federal Trade Commission Act into law on 26th of September, 1914. Once President Wilson assumed the office, he followed through on his promises to address the overages of Untied State’s trusts. Wilson’s State of the Union Address of 1913 included a change for extensive antitrust legislation. Wilson’s push, combined with citizen’s displeasure with the situation, resulted in the passage of two actions. The first was the Federal Trade Commission Act, which created and given power to the Federal Trade Commission to define and halt.
The unfair practices in trade and commerce. It was then followed by the Clayton Antitrust Act, which covered specific activities of corporations that were deemed to be not in the public interest. Activities covered by this act included those mergers which inhibited trade by creating monopolies. In reference to the United States Department of Justice, the Federal Trade Commission Act prohibits unfair methods of competition in interstate commerce, but carries no criminal penalties. It also created the Federal Trade Commission to police violations of the Act. The Department of Justice also often uses other laws to fight illegal activities, including laws that prohibit false statements to Federal agencies, perjury, obstruction of justice, conspiracies to defraud the United States and mail and wire fraud. Each of these crimes carries its own fine and imprisonment term, which may be added to the fines and imprisonment terms for antitrust law violations (Antitrust laws and you n.d.). Thus, the Federal Trade Commission began full operation in 1915. In addition to these federal statutes, most states across the U.S. Have their own antitrust laws that are enforced by state attorney general’s or private plaintiffs. The majority of these statutes are based on the federal antitrust laws. Are these laws effective? In my opinion, I believe antitrust laws are supposed to protect and promote fair competition. This is their main purpose, and they are not meant to intentionally punish companies.
Also, what is most important is they have never been anti-business or anti-market in their underlying intentions or in their execution. On the contrary, the antitrust laws are intended to promote market economics and healthy competition in every market, while checking the abuses that sometimes arise in other markets. In all healthy competition in any market keeps the sellers honest. Which forces them to grow continually both to improve their services and good, and to offer them on reasonable terms.
The competition benefits the customers. The best operated businesses, and the most honest and reasonable businesses, tend to succeed. Poorly operated companies are put out of business, as they deserve to be. Communities and neighborhoods as a whole benefits. Conclusion Today, the Federal Trade Commission serves an important function in the American justice system. As an enforcer of both business and consumer rights. Some of the restrictions that the commission enforces on company’s operations are often subject to the majority of attention.
All business owners should take the time to educate themselves about the guidelines. Enforced and set by the FTC on various business practices. Some of its rules can be very helpful to small businesses, and especially for young entrepreneurs. Businesses that openly disregard or remain ignorant of the FTC’s operating guidelines are suitable for the consequences. The main idea behind these laws is that in every market there should be strong and healthy competition.
For instance, in one market if there were many sellers actively competing against one another to sell one particular kind of service or product to paying customers. No business or seller, will be able to take upper-hand advantage of the customers, but rather each seller will be forced to offer its products or goods on terms of attraction, and each will be responsive and efficient in its dealings with buyers, who otherwise will simply turn to another, better seller. Overall, antitrust laws are nothing other than marketplace economics working correctly and recognizing American business owners for their passion, effort, and perseverance. The antitrust laws exist to help marketplace economics to run properly, smoothly and better. In some countries outside the United States economic markets, competition determines how the overall industry operate. Within the U.S. competition among companies is what gives our buyers a choice, allowing them to select goods or products that can work with their budget and needs. Economic competition provides really good advantages, but it also does comes at a cost.
Unfortunately, economic competition does comes with some disadvantages. Investment wealth can be slightly out of proportion divided into what earns the highest. Then leaving less finance for public social services, such as libraries, public schools, and police departments. Corporations that outsource their product to businesses overseas may partner with manufacturers who provide unethical working conditions with low wages. Some economists would argue that some disadvantage of economic competition is that it reduces the amount of human labor required to produce goods, as machinery operations are replacing assembly jobs.
The balance between the advantages and disadvantages of a competitive economy is important because it prevents our economy collapsing. Advantages and disadvantages change constantly due to fluxuation of global currency values and market factors. Reference List Antitrust laws and you. (n.d.). Retrieved January 26, 2014, from The United States Department of Justice website: https://www.justice.gov/atr/about/ antitrust-laws.html The antitrust laws. (n.d.). Retrieved January 26, 2014, from Federal Trade Commission website: https://www.ftc.gov/tips-advice/competition-guidance/ guide-antitrust-laws/antitrust-laws
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