Antitrust Laws and Their Affects on Small Business

Antitrust Laws and their Affects on Small Business

"Antitrust laws are legislation enacted by the federal and various state governments to regulate trade and commerce by preventing unlawful restraints, price-fixing, and monopolies, to promote competition, and to encourage the production of quality goods and services at the lowest prices, with the primary goal of safeguarding public welfare by ensuring that consumer demands will be met by the manufacture and sale of goods at reasonable prices.

Antitrust law seeks to make businesses compete fairly. It has had a serious effect on business practices and the organization of U.S. industry. Premised on the belief that free trade benefits the economy, businesses, and consumers alike, the law forbids several types of restraint of trade and monopolization. These fall into four main areas: agreements between competitors, contractual arrangements between sellers and buyers, the pursuit or maintenance of monopoly power, and mergers" (Hartman).

There are three main federal antitrust laws The Sherman Anti-Trust Act, The Clayton Act, The Robinson-Patman Act, congress also created a regulatory agency to administrate and enforce the law, under the Federal Trade Commission Act of 1914. This is an ongoing process influenced by economic, intellectual, and political changes; the U.S. Supreme Court has had the leading role in shaping how these laws are applied.

Congress passed the first of these acts The Sherman Anti-Trust Act in 1890 it was the first measure passed by congress to prohibit abusive monopolies or trusts, and in some ways it remains the most important.

A trust was an arrangement by which stockholders in several companies transferred their shares to a single set of trustees. In exchange, the stockholders received a certificate entitling them to a specified share of the consolidated earnings of the jointly managed companies. The trusts came to dominate a number of major industries, and were, in effect, monopolies.

A monopoly is a situation in which there is a single supplier or seller of a good or service for which there are no close substitutes. Economists and others have long known that unregulated monopolies tend to damage the economy by (1) charging higher prices, (2) providing inferior goods and services and (3) suppressing innovation, as compared with a competitive situation (i.e., the existence of numerous, competing suppliers of the good or service). The largest and most famous trust was the Standard Oil Trust of 1882. This trust controlled more than 90 percent of the oil