Ch. 26: Antitrust Law – No. 1
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
The Sherman Antitrust Act prohibits
(1) contracts, combinations, and conspiracies in restraint of
(2) actual or attempted monopolization of interstate trade
cannot be justified by cost differences,
Ch. 26: Antitrust Law – No. 2
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
“monopolist”) sells at least fifty percent (50%) of the
goods or services.
Monopoly Power: A monopolist’s ability to dictate
price, quantity, or both, in the market for its goods or
anticompetitive behavior that affects interstate commerce or
U.S. commerce with one or more foreign countries.
Monopolies or other restraints of trade that affect only
intrastate commerce are subject to the laws of that state.
TESTING ALLEGED VIOLATIONS
Alleged violations of the Sherman Act are tested against one
of two standards.
– they are violations of the Sherman Act per se; and
Rule of Reason: Acts or agreements that are not
considered to be illegal per se are analyzed by
comparing their positive effects (e.g., efficiency) against
benefits using means that would have had a less
restrictive effect on competition.
Ch. 26: Antitrust Law – No. 4
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Price Fixing: An agreement between competitors to fix
the prices of products or services. Such agreements are
illegal per se.
markets. Such agreements are illegal per se.
Trade Association: Persons in the same industry or
profession may organize for the purpose of, e.g.,
exchanging information, lobbying, advertising, and
Ch. 26: Antitrust Law – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
VERTICAL RESTRAINTS
Vertical Restraint: Any agreement between firms at
different levels in the manufacturing and distribution process
that restrains competition.
using the rule of reason.
Resale Price Maintenance: An agreement between a
manufacturer and a retailer in which the manufacturer
specifies (rather than suggests) the minimum retail
Refusal to Deal: Unilateral action by a manufacturer
who refuses to deal with one or more retailers or other
customers. The anticompetitive effects of such an action
are tested using the rule of reason.
Ch. 26: Antitrust Law – No. 6
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
MONOPOLIZATION
Monopolization requires
(1) possessing monopoly power in the relevant product or
geographic market, and
(2) willfully acquiring or maintaining that power (rather
than it having grown or developed due to a superior
product, business acumen, or accident).
the territory in which the alleged monopolist actually sells its
product.
Predatory Pricing: Pricing a product below the cost of
producing it in order to drive competitors out of a market.
PRICE DISCRIMINATION
Price Discrimination occurs when a seller charges different
prices for the same goods or services to competing buyers.
costs, transportation costs, or other cost differences do
not violate the Clayton Act.
Price discrimination will also be excused if the seller can
prove that it lowered its prices temporarily in an effort to
match or beat the price of a competing seller.
The seller must be engaged in interstate commerce;
however, the allegedly discriminatory prices need not be
charged to buyers in different states.
Ch. 26: Antitrust Law – No. 2
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
“monopolist”) sells at least fifty percent (50%) of the
goods or services.
Monopoly Power: A monopolist’s ability to dictate
price, quantity, or both, in the market for its goods or
anticompetitive behavior that affects interstate commerce or
U.S. commerce with one or more foreign countries.
Monopolies or other restraints of trade that affect only
intrastate commerce are subject to the laws of that state.
TESTING ALLEGED VIOLATIONS
Alleged violations of the Sherman Act are tested against one
of two standards.
– they are violations of the Sherman Act per se; and
Rule of Reason: Acts or agreements that are not
considered to be illegal per se are analyzed by
comparing their positive effects (e.g., efficiency) against
benefits using means that would have had a less
restrictive effect on competition.
Ch. 26: Antitrust Law – No. 4
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Price Fixing: An agreement between competitors to fix
the prices of products or services. Such agreements are
illegal per se.
markets. Such agreements are illegal per se.
Trade Association: Persons in the same industry or
profession may organize for the purpose of, e.g.,
exchanging information, lobbying, advertising, and
Ch. 26: Antitrust Law – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
VERTICAL RESTRAINTS
Vertical Restraint: Any agreement between firms at
different levels in the manufacturing and distribution process
that restrains competition.
using the rule of reason.
Resale Price Maintenance: An agreement between a
manufacturer and a retailer in which the manufacturer
specifies (rather than suggests) the minimum retail
Refusal to Deal: Unilateral action by a manufacturer
who refuses to deal with one or more retailers or other
customers. The anticompetitive effects of such an action
are tested using the rule of reason.
Ch. 26: Antitrust Law – No. 6
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
MONOPOLIZATION
Monopolization requires
(1) possessing monopoly power in the relevant product or
geographic market, and
(2) willfully acquiring or maintaining that power (rather
than it having grown or developed due to a superior
product, business acumen, or accident).
the territory in which the alleged monopolist actually sells its
product.
Predatory Pricing: Pricing a product below the cost of
producing it in order to drive competitors out of a market.
PRICE DISCRIMINATION
Price Discrimination occurs when a seller charges different
prices for the same goods or services to competing buyers.
costs, transportation costs, or other cost differences do
not violate the Clayton Act.
Price discrimination will also be excused if the seller can
prove that it lowered its prices temporarily in an effort to
match or beat the price of a competing seller.
The seller must be engaged in interstate commerce;
however, the allegedly discriminatory prices need not be
charged to buyers in different states.