For more than a hundred years, American businesses have been regulated in two ways: regulation and laws, which are called antitrust laws. These far-reaching laws are critical legal mechanisms to ensure that businesses operate in a fair and aboveboard manner that benefits consumers. A Florida business attorney can help you understand how antitrust laws affect your business.
Understanding the History of Antitrust Laws
Under the aegis of the Federal Trade Commission, antitrust laws regulate businesses with the primary aim of fostering healthy competition. The first significant piece of legislation was the Sherman Antitrust Act, passed in 1890, whose purpose was to prevent businesses from forming a monopoly to the detriment of consumers. Monopolies are bad. For example, if one big company controls all the apples available to customers then very high prices can be charged for the apples because consumers will have no choice. However, if three companies are competing for business they will try to increase their sales by charging less for apples, preventing an apple monopoly.
The antitrust movement in the US began in 1900 and for the next twenty years gained momentum. Regulating business was a relatively new concept. In the 19th century, with the dawn of the Industrial Age, America changed from a largely agrarian country to an industrial world leader, as railroads and manufacturing hired people off the farms. Men like Andrew Carnegie and Cornelius Vanderbilt became hugely wealthy. Standard Oil had made its founder, John D. Rockefeller immensely wealthy but it didn’t benefit customers, who paid dearly for oil. A 1910 lawsuit was filed alleging the company violated the Sherman Antitrust Act.
In more recent years the breakup of the Bell Telephone monopolies made phone service cheaper for everyone because now many companies are competing for your business.
What Antitrust Laws Do
Why are antitrust laws important? They are meant to
- Promote fair competition
- Prevent monopolies
- Protect consumers
If businesses engage in collusion, which means getting together to agree that the price of something should be set, then everyone gets charged that price. To put it another way, if all the apple growers decide every apple will always cost $2 then that is what all the consumers will pay if they want the apples.
To give another example, if you live in an apartment or a condominium and there is only one company that provides internet and cable services to the complex, you will end up paying more than if two or more companies were competing for your business.
The Federal Trade Commission regulates antitrust laws, and penalties for violating the Sherman Act are steep. Violators can be punished under civil or criminal law, and individuals can face penalties of up to a million dollars, a hundred million for a company, and possibly ten years in jail. If you are a business owner, it’s incumbent on you to understand how your business might be violating antitrust laws and how to avoid that. Your business attorney’s advice is critical to your company’s survival. Contact us today to learn more about how we can help you.