Robert F. Adams
DeVry University
Abstract
The purpose of this paper is to answer the provided prompt from my instructor completely and satisfactorily. This prompt is: “The United States has several laws that are intended to further fair, balanced, and competitive business practices. Do you think that such laws are effective? If so, why? If not, why not?” I will address a few topics and attempt to support my position with supporting facts found from reliable academically appropriate sources.
BUSN-115 Week 3 Assignment The United States of America has many laws to promote a fair, balanced, and competitive environment for businesses. This is partially accomplished through the Federal Trade Commission’s …show more content…
(FTC) antitrust laws. The opening paragraph on the FTC’s antitrust page is as follows: Free and open markets are the foundation of a vibrant economy. Aggressive competition among sellers in an open marketplace gives consumers — both individuals and businesses — the benefits of lower prices, higher quality products and services, more choices, and greater innovation. The FTC 's competition mission is to enforce the rules of the competitive marketplace — the antitrust laws. These laws promote vigorous competition and protect consumers from anticompetitive mergers and business practices. The FTC 's Bureau of Competition, working in tandem with the Bureau of Economics, enforces the antitrust laws for the benefit of consumers.1
These laws began in 1890 and continue today as the primary set of laws that govern much of all business practices today.
The first antitrust law, the Sherman Act, was passed in 1890 and together with a pair of laws passed in 1914, the Federal Trade Commission Act and the Clayton Act, forms the core antitrust laws still in effect today. The Sherman Act outlaws monopolization, attempted monopolization, or conspiracy or combination to monopolize, as well as, restraint on trade. It was ruled by the Supreme Court that not all restraint on trade is outlawed, only unreasonable restraint on trade. Examples of this would be price fixing or the rigging of bids. The Federal Trade Commission Act of 1914 established the Federal Trade Commission, but it also provided further antitrust guidance. The FTC Act supports the Sherman Act and provides room for further prosecution of those who violate the Sherman Act. Additionally it “…also reaches other practices that harm competition, but that may not fit neatly into categories of conduct formally prohibited by the Sherman Act.” 2 The only cases brought under the FTC Act are done so by the …show more content…
FTC. The Clayton Act is much more specific in that it addresses specific practices that aren’t listed in the Sherman Act. This act prevents deals which allow the same person to make decisions for both of two competing entities. Furthermore, this act provides guidance on “…mergers and acquisitions where the effect ‘may be substantially to lessen competition, or to tend to create a monopoly.’”2 Following an amendment by the Robinson-Patman Act of 1936, the Clayton Act “…also bans certain discriminatory prices, services, and allowances in dealings between merchants.”2 Civilly, the Clayton Act allows private parties to sue for triple damages if they have been “… harmed by conduct that violates either the Sherman or Clayton Act...”2 Private parties may also obtain a court order preventing anticompetitive practice in the future. These three sets of laws are the basis for all antitrust cases, laws, and rules of today. Given this, monopolies still exist in America. Government sanctioned monopolies. This means that the government not only knows they exist, but it promotes this. A few examples of these are the US Postal Service and some utilities, such as your water. Our text book has this to say on the topic: A monopoly occurs when one seller controls the total supply of a product or service, and sets the price. In the United States, laws prohibit the creation of monopolies. Nonetheless, the U.S. legal system has permitted monopolies in the markets for public utilities that sell natural gas, water, and electric power. These companies’ prices and profits are usually controlled by public service commissions to protect the interest of buyers. (Nickels 40) These prices are controlled by public service commissions; however, this doesn’t not promote new business.
This is also very infuriating to many consumers. For example, you may look at your water bill, see that you’re getting hit with only the minimum charge, and it still seems high. If this was the case with your cable bill, you could do something about it. Sometimes it only takes the threat or possibility of leaving for another company to bring prices down, as in telling the cable company you will be moving to a satellite company due to the rate difference. With you water bill, from the beginning of this example, you don’t have that choice. The only alternative you have is to pay a very large sum of money to have a well drilled, bring in the equipment to use the well, such as the pump and filtration equipment, and have a septic tank installed. Following this, you then would have to get your house plumbing rerun from the company lines to your newly installed system. If you are a renter, then this option is usually not only not viable, but more than likely not
allowed. In conclusion, the antitrust laws that are in place are good for business practices and good for consumers. But they’ll only be completely effective when they are completely followed. Exceptions should not be made just ‘because America.’ The government should be held just as liable to the laws it creates as the businesses it prosecutes. The economy in the United States was founded on competition and the citizens have always been opposed to monopolies back to the very beginning of the nation. Research on the Dutch East India Company and British East India Company will support this fact.
References
Nickels, William. Understanding Business, 10th Edition. McGraw-Hill Learning Solutions, 40913.
Ftc guide to the antitrust laws. (2010, January 06). Retrieved from http://www.ftc.gov/bc/antitrust/
Ftc guide to the antitrust laws. (2008, July 08). Retrieved from http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm