Antitrust Laws Explained Easy

You didn’t start your business to fail and you have surely heard the unwritten mantra of the business world:  get ahead no matter what it takes. Of course transforming your business in to the envy of your industry is going to take hard work and sacrifices must be made but getting ahead at all costs could come at a cost that leads to bankruptcy. As a business owner, you must understand what you can and can’t do when trying to get ahead.

The laws that govern how you grow your business are referred to as antitrust laws. These laws protect against unfair business practices that give any business an advantage that they shouldn’t have. Here are a few antitrust violations you should understand.

Conspiring to fix prices

Your business isn’t big enough to affect the pricing of goods and services in your industry, right? That may be true on a world-wide scale but price fixing can take place in a locality as well. Maybe you own a plumbing business and you teamed up with other plumbing businesses in the area for lawful purposes. Maybe the plumbers in your area pay in to a scholarship fund for local tradesmen that provides funding for education. This is certainly a lawful activity.

At one of your meetings you and the other local plumbing companies talked about your pricing structure and decided to enter in to an agreement where the pricing for your companies would be consistent so the prices of services wouldn’t degrade. This could very well be illegal under antitrust laws.

Price Discrimination

Using your corporate muscle to obtain pricing on products that isn’t available to other businesses is often illegal under antitrust laws. This is not the same as negotiating terms based on volume orders and favorable payment terms.

Boycotting

Let’s look at our plumbing meeting again. There is a plumbing supply house in your community where the owner recently raised their prices. At your meeting you all decided to not do business with them until the pricing returns to a more competitive level. This may be an illegal action under antitrust rules.

Zoning

At your next meeting, you brought a map of your community and divided up the community in to areas where each plumber would service. All of you agreed that if you received a call for service, you would refer them to the plumber assigned to that community. This would also be illegal as it sets up an unfair monopoly.

Speaking of monopolies

Maybe you don’t violate any of the rules above. In fact, you don’t talk to the other plumbers other than a weekly call offering to buy them out. Your company is growing so fast that you are putting others out of business or entering in to an agreement to purchase them. If your company grows so much that there are no other competitors, this may be a violation of antitrust laws. Every market must have competition or acquisitions you made may be illegal.

Antitrust laws are designed to protect the customer and smaller businesses. Before you do everything you can to get ahead, make sure that “everything” doesn’t include illegal activity.