A. Relevant Antitrust Acts

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Although there are many newer texts that reflect the growing changes in antitrust law (i.e. the Robinson-Patman Act or the FTC Act), the United States basically relies on two antitrust laws that made their appearance around the turn of the 20^th century.  These are the Sherman Act and the Clayton Act. 

In addition, there are some statues that are directed at specific industries or transaction that provide a layout of the consequences should there be a breach of antitrust law.

B. Enforcement

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Enforcement of the Acts are done by one of three ways; there is the Antitrust Division of the Department of Justice (DOJ), the Federal Trade Commission (FTC) or private persons alleging economic injury caused by violation of either of them. Together, they spell out the conduct and activities prohibited in economic, market transactions.

As mentioned above, the DOJ and the FTC are the governmental institutions that monitor compliance with antitrust law.  Sometimes these two agencies create enforcement and regulation complications because the two agencies’ policies prove to be in-congruent. While both have coextensive jurisdiction at the federal level, there are some differences. For example, the FTC does not have criminal enforcement authority. What complicates things even further is the 3^rd way of enforcement by means of private persons.  These groups have access to the courts and frequently bring cases that are inconsistent with the prevailing federal policies. One last complication stems from protectionist efforts of the Department of Commerce and the Int’l Trade Commission that influence competition policy.

C. Preconditions for applying the respective acts

I. The Sherman Act

1. Section 1 and 2

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In order to apply the Sherman Act, one merely has to look to the text and see if all the elements are met.  One must show:

1)      A contract or a conspiracy

2)      That restrains trade (unreasonably) OR

3)      A monopoly (or attempted monopoly) exists OR

4)      Mergers and acquisitions that lessen competition.

These elements summarize Section 1 and 2 of the Sherman Act.

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Any violation of the Act is seen as a felony and fines are currently set at $350,000 for individuals and $10 million for corporations.

2. Per se offences

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As with the European Union law, US antitrust law also mentions per se offenses for which there is no justification and are most likely to be criminally prosecuted. As the Supreme Court has expressed it:

“... there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.”

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A few per se offenses include:

1. Horizontal price fixing

2. Vertical price fixing (sometimes referred to as “resale price maintenance”)

3. Bid rigging

4. Market division (customer or territorial allocation)

5. Boycotts (concerted refusals to deal)

6. Tying arrangements (“If you want X, you must also take Y”)

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All of the per se offenses, as concerted activity in restraint of trade, are violations of section 1 of the Sherman Act.  All other activities are subject to a balancing test under the Rule of Reason as explained by the CRS Report for Congress:

The Report states that all activity that falls outside per se antitrust violations are judged by their reasonableness.  What this essentially means is that if some conduct is found to be unlawful, but there still remains aspects that are lawful, and if those aspects that are lawful outweigh an anticompetitive effects, then the action may be found to be reasonable and not in violation of antitrust laws. It is important to note that the is no equation or set formula that indicates a per se monopolization violation.  It is the totality of circumstances relating to the reasonableness of the actions that are taken into consideration.

II. The Clayton Act

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The Clayton Act is the broader Act and usually comes into play when dealing with unilateral price discrimination since the Sherman Act extends only to concerted activities/agreements.