Sherman Act is an article in the US antitrust law which provides the contact of the single firms by making provisions which prohibits monopolization or any other similar attempts within the different US states. This prohibition does not impose a totally ban on monopoly but only on monopoly that was acquired through wrong channel. Therefore in the United States business men can operate as monopoly as long as this was acquired through a legalized conduct. Many business people do not like their competitors and the only way to eliminate competition is by operating as monopoly and once a business has reached that level it’s assured of generating a lot of income. Therefore monopoly is allowed in the US as long as the consumers remain safe.
Unfair competition is further addressed in the Sharman act by prohibition of trust contract by multi firms. The reason for the further prohibition is the failure of conduct by allowing trust contracts. Monopoly which has no negative effects on business is not prohibited. A successful competitor that has been given a suitable environment for competition is not turned down by the state for this reason monopoly is allowed as long as it’s skillful. Therefore multi firm anti monopoly competition is limited to dubious agreements which are used to restrain trade. In the US the anti trust is limited to those contracts and agreements which are meant to unreasonable restrain trade. These contracts are critically analyzed on there potential to destroy or promote competition.
Under the category of conduct price fixation has been covered. Overt prices that are harmful to competition have been prohibited. Aspects which are critically scrutinized by the United States antitrust include product pricing, bid rigging, geographical market territories and walker fraud process. For these reason business firms selling the same product agrees on prices to avoid elimination of other business through pricing. Competitors are not allowed to compete within the business territory of another competitor. Illegal monopolization is not allowed and this is what has been discussed under walker fraud process. Antitrust law seeks to protect consumers by regulating the relationships between consumers and businesses. Every business is required by the state to offer quality products and for this reason business is required to avail some important information about the product to the consumers.
The states also prohibit advertisements which are considered to be misleading or compensation of the liabilities of the products that have been sold. The US has provided a clear distinction between anti trust and consumer protection. For this reason the European Union and the United States antitrust law lacks essential powers that are need to control consumer safety. All the existing antitrust laws are meant to restrict contracts that restrain trade as well as attempts to monopolization or actually monopolization. At other times they have the ability to restrain price discrimination which is usually done by businesses. Economists who are efficiency oriented want the antitrust law to be restricted to functions that are beneficial to consumers. Basically agreements which have negative impacts on trade are evaluated by applying a balance test followed by determining the effects of the agreement on trade.
Monopolization can be done by individual firm even without consultation with other relevant firms. Therefore any practice that can birth monopoly is regarded to be illegal. Claims of wanted pricing by large firms are what usually form the basis of monopoly. Though these clams are very common it’s quite difficult to proof whether they are right or not. Large companies with a lot of money tend to engage in predatory pricing by selling there commodities at a relatively lower prices in order to eliminate small competitors. After eliminating the small competitors such companies usually gain market control and as a result they start to price there products at prices that are convenient to them. Such firms usually put high entry barriers in order to eliminate any further competition. This is basically what the antitrust law prohibits.
In the United States there exists federal and states antitrust laws. The implementation of these laws was in three forms. The US antitrust law seeks to protect enterprise values of America. This law does not only seek to protect consumers but also to prohibit misuse of power in the market place. In the US the federal department has powers to sue a company for violating the antitrust laws under the division of antitrust. An example of this is when the federal government broke the monopoly of local telephone services and the Microsoft Company in the late twenty century. Another department that has powers in dealing with issues to do with monopoly and market competition is the states attorneys general department. Private civil suits may be handled by the two departments. And for these reason private law suits have been greatly encouraged.
In the US there are two forms of monopolies for instance monopolies that have been protected by the government as well as those that are not under the laws protection. A good example of monopolies that does not lie under the government’s protection are those that came into being as a result of a company being the best supplier of a given product. Experts urge that the one kind of monopoly that needs to be destroyed is where a company exclusively and persistently controls a product that is of high demand making its consumers to be at the mercy of the specified company. This becomes more challenging when there is no other supplier that the consumers can turn to. In such a scenario price determination is solely left in the hands of the company as well as production decisions which will have been influenced by market competition, this is basically the cause of customer exploitation. This kind of monopoly is what is referred to as coercive monopoly and that is why economic experts recommend that the government should only prohibit this kind of practice.
Experts argue that this kind of competition can only come about through illegal practices. Some economists argue that prohibiting monopoly and competition promotion causes more harm than good. Research which has been done has revealed that predatory pricing is so ideal therefore not practical and this can only be regulated or eliminated through a free market. For this reason they recommend that in order to prevent predatory pricing there is need for enforcement of laws that govern free market than implementation of antitrust laws. Sowell argues that though a company may manage to eliminate a potential competitor it does not all end there since competition will not have been fully eradicated. Economist’s experts argue that the existence of antitrust lowers blocks businessmen from engaging in some illegal practices. Businessmen tend to fear that some practices which can be socially useful may be termed illegal. Experts think that this restriction has limited the inventions that will have been made as well as fully utilization of the available capital forcing people to live at a relatively lower standard than they would have lived because of the antitrust law.
The opponent of antitrust supports competition since it leads to reduced market prices. The globalization of competition law has been a trend of the twentieth century. The most powerful competition regulators are the United States antitrust law as well as the European Union competition law. Currently there are enforcement competition networks that have been formed world widely in order to control competition and monopoly. Completion laws that govern competition within a specific country are widely considered to be modern. One of the important characteristics of national competition law is that they usually not control competition beyond the specific borders of that nation. The china’s anti-monopoly law differs from the European Union competition law since the Chinese law regulates completion and monopoly outside its territories. The security of international competition is basically governed by international agreements that pertain to competition.
The negotiations that were done before adopting General Agreement on Tariffs and Trade did not propose many competition obligations though in 1994 the World Trade Organization was created. The layout of the competition law of European Union is similar to the anti-monopoly law of China. The completion law has three specific elements and the first part of the law is the prohibition of trade agreements is maybe a barrier to free trade as well as competition. The main aspect that has been dealt with, in this sector is the formation of cartels which has the habit of repressing free trade. The abusive behavior of a company that dominates the market has also been banned by this law. This practice often leads to market dominance. Finally the European Union competition law supervises the major upcoming industries. Through this supervision transactions which can are a threat to completion process are discovered. Such practices have been prohibited by the EU competition law.
Most of the time if the state does not prohibit such practice they tend to restrict by denying some businesses licenses in order for competition to exist. The practice and contends of the completion law is variable depending on the authority its being practiced from. Some of essential practices of the economic market are consumer protection as well as effective competition. There is a close relationship between competition law and unregulated market access where the government dos not regulate the market procedures and happenings through some strategies like subsidies and privatization. In our current world competition laws are being viewed as strategies to offer good private services. Bork an economic expert warns that competition law may yield some adverse effects especially when there is reduced competition which may lead to greater legal intervention when compared to customer benefits.
Laws that govern competition have been there since the prehistoric times. Medieval monarchs and empires used tariffs to stabilize production and prices. Studies on competition which can be considered to be formal started in the eighteenth century. One of the ancient competition laws is what is referred to as Lex Julia de Annona which enforced around 50 BC during the Roman Republican. During that time grain was protected by imposing heavy fines on people as well as the shipping companies. The restrictions were to be adhered to strictly because of the death penalty on anyone who was to violate them. The ancient restraint to trade is similar to the present competition law though that law is currently not much in use because of the present innovations in our markets. A restraint trade can simply be defined as a provision or agreement which has the potential of restricting another person’s trade. There are drastic changes from trade restraints to competition law in order to counteract the new market challenges and environment.
The competition laws that are currently in operation were started by the United States Sherman Act in the year 1980. All the other subsequent competition laws were mainly founded on the United States antimonopoly law which has great influence on these other laws. There have been many modifications on competition laws from the Second World War. At the moment there is much attention which has been channeled to this economic sector. The two main systems that are currently regulating prices remain the US antitrust law and the competition law of European Union. The American antitrust law came into being in order to portray the trust that must be development before carrying out a business transaction. One of the main characteristic of monopoly was the huge trust. These monopoly industries posses much threat to the democratic nation, for these reason Clayton and Sherman Acts were enacted. The United States antitrust law has some great similarities to the ancient trade restraint. The evidence of the antitrust law is available in the Standard Oil Case. Even after the enactment of the Sherman Act immediate effects did not happen. The functions of this act are found under title fifteen of the States Code.
In the mid 1900 Western European countries which include six countries assigned a treaty which has developed from then to the present European Union. European competition law follows under the EU laws which are the governing laws of the European Community. Health completion is the only way of achieving a free market with no restrictions. Article 81 EC in the European Union laws is what deals with cartel restrictions as well as prohibition of agreements which are economically considered to be vertical. Analysts have declared that the provisions in this article are unclear since they talk about restrictions of practices that may hinder trade between member state as well as other monopolistic barriers. There have been two schools of thoughts in the provision in Article 81. The first school of thought is that this law only governs the member state though the recent research reveals that there was an error since other aspects that relate to the environment and health were supposed to be included.
The contents in Article 81 nullify any trade agreements that promote price fixation as well as market sharing. Part three of this article offers some exemptions just like the US antitrust law. The companies which are exempted from this agreement are those involved with technological innovations that give a good share to the consumers. Article 82 deals with monopoly and abuse of the dominant position. The existing difference between the United States antitrust law and the European Union competitive law is that the competitive law has never been applied in suing or punishing dominant firms like the antitrust law. The competition law has been coined in a way that special responsibility is imposed to govern conduct of firms. Some categories that have been specifically listed in the article include price discrimination as well as dealings that may be considered to be exclusive. The rest of the provisions are similar to the United States Clayton Act. The same article continued further and gave the European Council the powers of controlling mergers between the existing firms. This section is what is currently referred to as Regulation 139/2004/EC. One of the major concerns is whether concentration on dimensions that are considered to be community based will weaken the restrictions on competition.
In Article 87 and 86 there are provisions that are used to regulate the functions of the state when it comes to the market. This article states that there is no provision that can hinder a member state from supplying public services unless they personal collude with other firms in abusing there dominance. In article 81 of the EC there are rules which are meant to govern the state in order to prevent its interference in distorting free competition. The only exemptions that have been granted to the state is on events that deals with natural disasters as well as charity. When the member states recognized the loopholes in their sanctions and remedies they followed the US version by executing judgments and penalties as well as jail sentences to the law breakers. As a result of these other countries came up with laws which were meant to govern completion. For example the Indian competition law which allows its citizens to implement chapter three of their law and as a result there have a risen conflicts because of the implementations that were done. Despite the fact that other competition laws that have come up are inline with the US antitrust law there has been an increasing involvement in the competition law by international organizations. A good example of involvements in completion law is the United Nations Conference on Trade and Development (UNCTAD).