Employment & Environment: Antitrust

Question 1

Employment & Environment:
Antitrust
Overview

Answer 1

• goal of antitrust law is to promote economic competition
  Sherman Act of 1890
• prohibits contracts, combinations, and conspiracies in restraint of trade
• prohibits monopolization, or intent to monopolize, and conspiracies to monopolize
  Clayton Act of 1914
• prohibits: price discrimination, tying and exclusive dealing, anti-competitive mergers, interlocking directorates among large corporations that compete with one another
  Federal Trade Commission Act 1914
• created FTC
• prohibits “unfair methods of competition”
  Robinson Patman Act of 1936
• section 2 amends the clayton act to make the law against price discrimination more effective
• includes foreign activity affecting interstate commerce

Question 2

Employment & Environment:
Antitrust
Remedies

Answer 2

Antitrust Remedies
- DOJ Antitrust Division can bring civil or criminal penalties
- FTC can enforce acts
- Private Parties can file civil lawsuits claiming violation of acts and seek treble damages
Exceptions:
- labor union collective bargaining is exempt
- public utilities and common carriers
- non interstate commerce

Question 3

Employment & Environment:
Antitrust
Monopolization

Answer 3

Prove

• overwhelming market power
• intent to monopolize (75% market share)
  
  • predatory pricing with intent to drive out competitors
  • non price predation: tying up customers, taking key employees, falsely disparaging, unjustified lawsuits, sabotage

Question 4

Employment & Environment:
Antitrust
Mergers

Answer 4

Horizontal
- between competitors if combined market share exceeds 30%
Vertical
- between companies in distribution chain
Conglomerate Mergers
- very unlikely to face challenge

Question 5

Employment & Environment:
Antitrust
Horizontal Restraint of Trade

Answer 5

Collusion
- evidenced by communication between parties
Rule of Reason Defense
- predominant purpose of contract is to restrain competition
- if less strict wording would have had same affect, section 1 violation
Per se Illegality
- price fixing, market division, boycotts

Question 6

Employment & Environment:
Antitrust
Vertical Restraint of Trade

Answer 6

Resale Price Maintenance
- seller and buyer agree on price sold to customers
Vertical Non-Price Restrictions
Tying Arrangements
- agrees to sell X only if purchase Y too
- only if substantial market power (30%)
- generate substantial portion of business in tied market
Exclusive Dealing
- ban illicit use of “requirements” or “output” contracts
- only if substantial market power (30%)
Price Discrimination
- seller charged 2 different prices to customers
- involved tangible commodities
- sales, not leases or consignments
- goods were the same
- substantial injury to competition resulted
Defenses
- cost justification
- meeting competition
- changing conditions