What are Antitrust Laws?

July 29th, 2015

Antitrust laws were designed to help promote the free trade of the American economy.  The Sherman Antitrust Act was created in 1890 to prevent businesses or individuals from monopolizing or conspiring to monopolize an industry.  Subsequently, the Federal Trade Commission Act and the Clayton Act were both passed to further the goals of the Sherman Act.  Because business competition benefits consumers and the economy, these laws are not meant to restrict competition.  They only apply to actions by a business or person that are unreasonable, such as forcing a person to cease doing business in order to avoid competition in the market.  The laws also provide consumers with protections so that they may benefit financially from the prices that result from business competition.

Some of the business practices banned or regulated by the Antitrust Laws include:

  • Price fixing
  • Division of markets
  • Bid rigging
  • Exclusive dealing contracts
  • Mergers and acquisitions
  • The creation of non-compete clauses
  • Lock-up agreements

The Sherman Act imposes criminal sanctions for those individuals and companies who violate it.  The consequences for violating these laws can be severe.  An individual may face jail time in addition to being issued a fine.  A corporation may be issued up to a $10 million fine per violation.

Although the Clayton Act is a civil statute and carries no criminal penalties, under the Act, mergers and acquisitions above a certain size must be reported to the Antitrust Division and the Federal Trade Commission.  Companies or individuals who have suffered injury as a result of a violation may sue the violating party for three times the amount of damages suffered, in addition to litigation costs.

In addition to the federal antitrust laws, states also have their own antitrust laws.  Both federal and state antitrust laws can be enforced by the New York Attorney General.

While it is unlikely that your new business will have to be concerned about antitrust laws, it is important to consult with an experienced business attorney who can advise you regarding state and federal laws concerning the regulation of business entities. Call Bellavia Blatt, PC at (516) 873-3000 or (631) 224-7000.

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