What Conduct Violates Antitrust laws?
Antitrust laws are the broad group of federal and state laws that are designed to make sure businesses are competing fairly. Antitrust laws are necessary for an open marketplace. Competition among competitive firms gives consumers lower prices, higher-quality products and services, more choice, and greater innovation.
The most common antitrust violations fall into two categories:
(1) Agreements to restrain competition; and
(2) Efforts to acquire a monopoly.
In the case of a merger, a combination that would likely substantially reduce competition in a market would also violate antitrust laws.
Common examples of antitrust violations include:
• "Price fixing" which includes any agreement by competing vendors that establishes an agreed price or otherwise determines how the price will be set among those vendors. The agreement to fix the price may occur at the wholesale or the retail level. Agreements between competitors that establish boundaries for pricing, such as setting a minimum or maximum price, are also prohibited.
• "Bid rigging" which includes any agreement by independent competitors to not fully compete against each other in responding to a request for bid, including:
o Bid Suppression, such as an agreement to not bid
o Complementary Bidding, such as an agreement to bid “under” a certain amount
o Bid Rotation, such as an agreement to take turns bidding for certain jobs
Bid rigging is viewed as a form of price fixing. It may occur in any situation where a purchaser solicits bids for products or services. Many public entities are required to solicit bids, making them possible targets for bid rigging schemes
• “Market Division or Allocation” includes any agreement between competitors that they will not compete with respect to certain products, certain customers or in certain geographical areas. These types of agreements can constitute bid rigging.
• “Boycotts” are agreements among competitors to not make sales to a particular customer or a market so as to prevent that customer or people in that market from being able to purchase the products or services.
• “Tying” can occur when a seller who has market power over one product (the “tying product”) will only sell that product to buyers who agree to also buy a different product from the seller (the “tied product”) so that the buyers are effectively coerced to purchase that tied product from the seller rather than from any competitor.
• “Monopolization” or attempted monopolization can occur when a dominant seller seeks to maintain or increase its market power through anticompetitive tactics that tend to foreclose the market to competitors and are not justified by pro-competitive benefits for consumers.
How Are The Antitrust Laws Enforced?
There are three main ways in which the Federal antitrust laws are enforced:
• Criminal and civil enforcement actions brought by the Antitrust Division of the Department of
• Civil enforcement actions brought by the Federal Trade Commission.
• Lawsuits brought by private parties asserting damage claims.
What Are The Penalties For Violating Antitrust Laws?
There are three main ways in which the federal antitrust laws are enforced: criminal and civil enforcement actions brought by the Antitrust Division of the Department of Justice, civil enforcement actions brought by the Federal Trade Commission and lawsuits brought by private parties asserting damage claims.
The penalties for violating the antitrust laws are severe.
On the criminal side, violating the antitrust laws can be a felony offense. Individuals involved in some antitrust violations can, and do, go to jail. In addition to imprisonment, criminal prosecutions for antitrust violations can result in severe financial penalties for companies and individuals. Specifically, the Sherman Act imposes criminal penalties of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison. Under federal law, the maximum fine may be increased to twice the amount the conspirators gained from the illegal acts or twice the money lost by the victims of the crime, if either of those amounts is over $100 million.
On the civil side, the costs of defending a private antitrust class action can run into the millions of dollars, depending on the size of the case, and settlements or trial verdicts, where plaintiffs can seek to recover triple their actual damages as well as their attorneys’ fees, can run into the tens of millions or hundreds of millions of dollars.