Why Antitrust Laws Were Created

The first antitrust law created was the Sherman Antitrust Act in 1890, which became the basis for subsequent antitrust laws (Jurist, 2013). The Sherman Act was a good start, but it was not comprehensive enough to prevent trusts, and large corporations continued to exert strong control over industries. At the turn of the century, a few large companies controlled almost half of all production facilities in the country (West, n.d.). It became clear that more legislation was needed. President Theodore Roosevelt called himself a « trustbuster » and launched a campaign to create more effective legal efforts (West, n.d.). Other antitrust laws were passed in 1914, including the Clayton Act and the Federal Trade Commission Act. These laws are still in force, and since 1914 they have been amended by Congress to further expand and consolidate coverage. Antitrust laws are estimated to save consumers millions of dollars annually by prohibiting business practices that unfairly increase the prices of goods and services (United States Department of Justice, n.d.). But antitrust policy and enforcement declined during the fourth cycle (from the late 1970s to the mid-2010s) with the rise of the Chicago School of Economics in the late 1970s, which supported the Reagan administration with its enforcement priorities, judicial appointments, and amicus curiae briefs to the Supreme Court. In the Obama administration, we didn`t have a popular antitrust movement or many major antitrust cases. Enforcement of the cartel remained robust, but antitrust enforcement slowed. The government has rarely questioned mergers between competitors. Challenges to vertical mergers were even rarer, the last being brought before the courts in 1979.

To understand the current moment in antitrust law and what should come next, let`s take a historical perspective. U. Antitrust policy and its enforcement rose and fell in four cycles: one problem some saw with the Sherman Act was that it was not entirely clear which practices were prohibited, so businessmen did not know what they were allowed to do and state antitrust authorities did not know what business practices they could challenge. In the words of one critic, Isabel Paterson, « As crazy legislation, antitrust laws stand on their own. No one knows what they are forbidding. In 1914, Congress passed the Clayton Act, which prohibited certain business activities (such as price discrimination and tied selling) if they significantly lessened competition. At the same time, Congress created the Federal Trade Commission (FTC), whose legal and economic experts could force companies to accept « consent decrees, » which were an alternative mechanism to antitrust policing. Antitrust laws serve to promote and protect the market economy, based on the theory that society thrives most when it is based on strong competition: according to this theory, competition brings out the best in each of us, keeps each of us on our guard, aware that if we are not successful, we have been set aside for someone else who can perform better. It`s hard logic, and it works very well because it correctly understands and anticipates real human nature and human psychology in action. Antitrust laws are designed to ensure that these incentives and the resulting excellence and low prices thrive in all markets (except those that naturally only allow the presence of a seller). We want many bakers to compete for your business.

If you are a baker, we want you to compete with your competitors for our business. We don`t want one baker or a bunch of bakers to destroy competition in their local market and then force customers to submit to higher prices, less responsive service or underbaked bread. There are other more technical errors which also constitute cartel infringements: for example, Article 3 of the Clayton Act constitutes an antitrust infringement if two or more undertakings apply exclusive distribution agreements, if these agreements are likely to exclude a substantial part of the total turnover in a relevant market for an extended period of time, thus preventing competing sellers from making sufficient sales. achieve sufficient economies of scale. Under the Robinson-Patman Act, it is sometimes illegal for a company to charge different prices for the same goods when selling them to different commercial customers, but only if the practice affects competition in the seller`s market, in its customers` markets or in the tertiary markets.