What Is Antitrust Law and Trade Regulation?

Business thrives on fair competition. Because of trade regulation and antitrust laws, consumers have product choices and reasonable prices. Antitrust laws prevent one company from monopolizing a commercial sector. Small businesses enjoy open trade and fair business practices.

The Federal Trade Commission (FTC) oversees interstate antitrust laws. States have their own antitrust laws based on federal laws. Small business owners are more likely to encounter legal issues with state antitrust laws than federal ones.

Definition of Antitrust and Trade Regulation Law

Antitrust law prevents restraint of trade and unfair business practices. The first federal antitrust law, the Interstate Commerce Act, became law in 1887 to regulate railroad prices. Other federal laws against unfair trade practices, such as monopolies and price fixing, soon followed.

The Sherman Act bans monopolies and collusion between companies to set prices. Monopolization happens when a company has exclusive control over a market niche because it unlawfully suppressed other competition.

The Clayton Act bas activities that can result in monopolization by promoting unfair competition. Some of these activities can lead to antitrust litigation by the FTC. If consumers know these actions, they should report them to the FTC or state antitrust office.

• Price fixing. Competitors can't agree to set prices that benefit both. For instance, two shoe stores on the same block cannot agree to keep their sneaker prices identical, so both stores have the same profit margin on the shoes.
• Predatory pricing. At the same time, a business can't set its prices so low it undercuts its own profits to drive competitors out of business.
• Bid rigging. Cities and companies often put large projects out for competitive bids. Contracting companies can't work together to pre-determine their bids with the promise that other bidders will be subcontractors if one wins the contract.

Joint ventures are usually legal when two companies combine resources or production capabilities. Structuring problems make joint ventures risky, and companies should get legal advice when starting such a project.

The Antitrust Division of the U.S. Department of Justice handles antitrust matters. An antitrust case may result in injunctions, divestiture, fines, or imprisonment.

Terms to Know

• Hart-Scott-Rodino Act — This act updates the Sherman and Clayton Acts. It requires pre-notification of mergers and imposes a waiting period on them.
• Compliance Program — A company program that helps employees understand antitrust and trade regulation laws.
• Tying Agreement —An unlawful agreement in which a buyer must buy an item they do not want to get the item they do want.

For more legal definitions, visit the FindLaw Legal Dictionary.

Other Considerations When Hiring an Antitrust and Trade Regulation Lawyer

Antitrust issues often come up during corporate mergers. Antitrust lawyers are part of a company's legal department and can answer concerns about monopolization of a market or price discrimination if the merger goes through. The FTC can prevent a merger if it will create a monopoly.

Small businesses may have antitrust issues. Group boycotts, where companies refuse to do business with a particular distributor, can lead to antitrust class-action lawsuits. Smaller companies are more vulnerable to predatory pricing by large corporations looking to establish a monopoly.

If you or your business have an antitrust or trade regulation issue, contact an antitrust lawyer immediately to protect your rights and explore your legal options.

Related Practice Areas

• Business and Commercial Law
• Consumer Law
• Intellectual Property Law
• Corporate Law
• Administrative Law