Why are Antitrust Lawsuits Important?
Without antitrust lawsuits, large corporate defendants would be able to cause large amounts of harm to consumers and small business without any risk of monetary penalty.
Antitrust violation claims enforce regulatory statutes that keep companies honest and hold them accountable when they deceive the public or fall below acceptable industry standards.
Antitrust Laws & Violations
In 1890, congress passed the first antitrust law, the Sherman Act, aimed at “preserving free and unfettered competition as the rule of trade.” It was billed as “An Act to Protect Trade and Commerce Against Unlawful Restraints and Monopolies.”
In 1914, Congress passed two other antitrust laws: the Federal Trade Commission Act, which created the FTC, and the Clayton Act. These laws are still the backbone of current antitrust law.
The antitrust laws were broad and written in general terms, leaving courts to consider each individual case. The market has changed in almost every way conceivable since these laws were established, yet the laws still aim to protect competition for the benefit of consumers. The goal is ultimately to keep prices low, and keep quality high.
The Sherman Act focuses on the breaking of monopolies, business collusion and conspiracy. The penalties for Sherman Act violations are strict, and claims can be filed civilly and criminally law. Those in violation may be prosecuted by the Department of Justice. Criminal prosecutions are possible when competitors fix prices or rig bids. The Sherman Act imposes criminal penalties of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years imprisonment.
The Federal Trade Commission Act bans unfair or deceptive methods of competition and business practices. The Supreme Court has said that all violations of the Sherman Act also violate the FTC Act.
The Clayton Act addresses specific practices that the Sherman Act does not clearly prohibit, such as mergers and acquisitions and discriminatory prices. The Clayton Act authorizes private parties to sue for damages when they have been harmed by Sherman or Clayton Act violations.
Antitrust Violation Questions
Antitrust laws exists to ensure that no one company, or a group of companies in cahoots, have so much power that they can disrupt the entire competitive market.
Antitrust law gives regulators the power to reign companies in when they grow too large or act in unlawful manners. Some antitrust statutes outlaw specific actions, and may prevent or undo specific results.
- Predatory pricing
- Refusal to Deal
- Exclusive dealing agreements
- Bid rigging
- Price fixing
- Market Division (customer allocation)
- Anti-poaching (wage fixing)
- Price discrimination
In many cases, state attorney generals and the Department of Justice will pursue companies who violate antitrust laws. However, private parties can also bring claims to enforce the antitrust laws. Antitrust lawsuits can be brought by small businesses and individuals seeking damages for violations of the Sherman or Clayton Act. Private parties can seek court orders to prevent anti-competitive behaviors or bring suits under state antitrust laws.
Anti-competitive law is quite strong as antitrust violations can have a huge impact on individual businesses and the economy as a whole. To discourage companies from pursuing illegal business practices, antitrust law allows courts to award plaintiffs triple the amount of the economic injury.
The FTC and the U.S. Department of Justice (DOJ) Antitrust Division enforce antitrust laws and may take legal action when necessary. The FTC devotes most resources to certain consumer arenas such as health care, pharmaceuticals, food, energy, and technology.
From tractors to wheelchairs, consumers and business owners are fighting to have a right to repair their purchased products without returning to the original manufacturer to exclusively fix a broken machine or product. Consumers, by law, have a right to repair a product independently for a fair price. When companies control the right to repair with sophisticated software, they may be violating antitrust laws.
The Robinson-Patman Act makes it illegal to offer different pricing to competing buyers for the same “commodity.” Price discrimination may give favored customers an edge in the market that has little to do with their superior business practices. Price discrimination is generally lawful, however. The Supreme Court has ruled that price discrimination claims under the Robinson-Patman Act must meet specific legal tests:
- The Act applies to commodities, not to services, and to purchases, not to leases.
- The goods must be of similar grade and quality.
- There must be clear injury to competition.
- The sales must include interstate commerce.
The Robinson-Patman Act also forbids certain discriminatory services paid to customers. A seller must in effect treat all competing customers in a proportionately equal manner. Services covered include payment for advertising, handbills, signs, demonstrations, display and storage, special packaging, warehousing facilities, credit returns, and prizes or free promotional merchandise.
Visa and Mastercard: Business owners alleged that Visa and Mastercard forced retailers to accept debit cards and pay the same transaction fee as they did on credit cards. A $6.2 billion settlement was reached and Visa and Mastercard were forced to mark their cards to distinguish between debit and credit cards.
Airlines: Several domestic airlines, including, American Airlines, United, Delta and Southwest were accused of conspiring to increase fares by reducing capacity on domestic flights. Southwest and American settled for $15 million and $45 million, while the others involved have not.
Microsoft: Plaintiffs accused Microsoft of engaging in unfair and anti-competitive business practices, overcharging consumers and violating antitrust laws. A settlement of more than $700 million was reached.
The Lyon Firm investigates antitrust and competition claims in the following industries:
- Health care
The attorneys at The Lyon Firm are well-versed in investigating illegal business dealings and antitrust violations. Joe Lyon takes pride in representing victims of unfair business practices, both consumers and business owners. Call for a free and confidential consultation.
The Lyon Firm has filed an antitrust lawsuit against John Deere, which can be read about in this blog post.