Antitrust laws are regulations that monitor the distribution of economic power in business, making sure that healthy competition is allowed to flourish and economies can grow. These laws regulate the conduct and organization of business corporations for the benefit of consumers. These regulations were originally established to check the abuses threatened or imposed by the large “trusts” that emerged in the late 19th Century.
An example of behavior that antitrust laws prohibit is the lowering of the price in a certain geographic area in order to push out the competition.
Most antitrust statutes are enforced in two ways;
- The state attorney general can sue on behalf of the state in order to correct the unfair practice by obtaining an injunction prohibiting the offensive practice or by ordering fines or other redress to be paid or otherwise addressed to the consumers.
- By a private right of action, whereby consumers themselves or competing businesses sue to recover for damages or injuries suffered as a result of the offending behavior.
Although the federal government normally handles antitrust cases since they normally involve interstate commerce, states also have roles to play. California antitrust laws (California Code, Business and Professions Code – BPC § 16700) allow private lawsuits against defendant businesses. However, these lawsuits must be filed within four years.
There are two major federal antitrust laws;
- The Sherman Antitrust Act – This prohibits any unreasonable interference with the ordinary, usual and freely competitive pricing or distribution system of the open market in interstate trade. (15 U.S.C. Sec. 1-7)
- The Clayton Act – This law prohibit price discrimination, exclusive dealing contracts and mergers where the effect may lessen competition or tend to create a monopoly in commerce. (15 U.S.C. Sec. 12-27)
