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The origin of anti competitive agreements and abuse of dominant position in USA and laws pertaining to it.

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The origin of anti competitive agreements and abuse of dominant position in USA and laws pertaining to it.

The origin of anti-competitive agreements and abuse of dominant position in USA and laws pertaining to it.

The origin of anti-competitive agreements and abuse of dominant position in USA and laws pertaining to it.

During the late 1800s and early 1900s, the United States experienced a period of rapid industrial expansion that gave rise to powerful business trusts, which monopolized entire industries. These trusts began to disrupt the economic system of the state by using their immense power for unfair competition and price fixing, ultimately gaining full control over the market. These anti-competitive practices resulted in adverse effects on consumers and stifled innovation. In response to this, the U.S. government implemented a series of laws to curb these abuses and promote fair competition in the market.

The Sherman Antitrust Act, 1890.

The first law was the Sherman Antitrust Act, which was passed in 1890. This landmark legislation was named after Senator John Sherman, who was a lawyer and an expert in regulation of commerce. The Sherman Act was designed to outlaw all combinations that restrict trade between states or with other countries, as well as cartel agreements, price fixing of products and taking over control over market. The Act also made it illegal for any company or individual to monopolize or attempt to monopolize any part of interstate commerce. Violations of the Sherman Act were

punishable with fines of up to $10 million for corporations and up to $350,000 for individuals, along with imprisonment upto three years.

Despite its noble intentions, the Sherman Act had several shortcomings. For one thing, it was not clear on what activities constituted an illegal trust or monopolization. In fact, the Act was so broad that it was widely criticized for effectively outlawing all trusts, regardless of whether they were engaging in anti-competitive behavior or not. Moreover, the Act was often circumvented by trusts that found new ways to operate outside its purview. These shortcomings led to the enactment of two additional antitrust laws: the Clayton Act and the Federal Trade Commission Act.

The Clayton Act, 1914

The Clayton Act was passed in 1914 and was designed to supplement the Sherman Act. It addressed many of the drawbacks of the earlier law, including the act of mergers and acquisitions that were used by the trust/corporates to bypass antitrust regulations. The Clayton Act made it illegal for companies to merge if the effect of such a merger would be to substantially lessen competition or to create a monopoly. The Act also prohibited certain business practices that were deemed to be anti-competitive, such as tying arrangements, exclusive dealing contracts, and price discrimination.

The Federal Trade Commission Act, 1914.

The Federal Trade Commission Act (FTC) was also enacted along with the Clayton Act. The main difference between this Act from the Sherman Act and the Clayton Act is that it focused primarily on false advertising and deceptive business practices, rather than monopolies or anti-competitive behaviors. Under the FTC Act, companies were prohibited from making false or misleading claims about their products, and they were required to include accurate and complete information on their product labels.

This Act also established the Federal Trade Commission (FTC), a body responsible for investigating unfair methods of competition and unfair or deceptive acts or practices. The FTC was granted broad investigative and enforcement powers and was authorized to conduct hearings, issue subpoenas, and seek injunctions against companies that violated antitrust laws. The Act also created the Department of Justice, which included three bureaus: the Bureau of Competition, the Bureau of Consumer Protection, and the Bureau of Economics. These bureaus were tasked with enforcing antitrust laws and protecting consumers from unfair business practices. This Act also gave the FTC the power to bring enforcement actions against companies that engaged in deceptive advertising or other unfair business practices.

The Robinson-Patman Act, 1936.

In addition to the Clayton Antitrust Act and the Federal Trade Commission Act, the Robinson-Patman Act of 1936 was also enacted as an amendment to the Clayton Act. The Robinson-Patman Act primarily focuses on price discrimination, which occurs when a company charges different prices from different customers for the same product or service. This Act prohibits price discrimination that substantially lessens competition or creates a monopoly, and it also prevents companies from giving preferential treatment to certain customers.

The Cellar-Kefavur Act, 1950

The US government introduced the fifth Act aiming at preventing fraudulent activities, anti-merger practices, and other illegal actions during corporate mergers.

Antitrust Civil Process Act, 1962

Before the enactment of the Antitrust Civil Process Act, the US government were lacking a dedicated civil investigation agency. The Federal Trade Commission (FTC) was active in investigating anti-competitive practices, but the Department of Justice lacked the necessary authority to obtain documentary evidence to determine if an antitrust violation had occurred. The Antitrust Civil Process Act established this authority, allowing the Department of Justice to focus on civil liabilities while the FTC continued to handle accusations and penalties.

The Hart-Scott-Rodino Antitrust Improvements Act, 1976.

Another important antitrust law is the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which requires companies to notify the Federal Trade Commission and the Department of Justice before merging or acquiring another company if the value of the transaction exceeds a certain threshold. This law helps to prevent companies from engaging in anti-competitive mergers that could harm consumers and restrict competition.

The International Antitrust Enforcement Assistance Act Of, 1994

This Act is one of the most crucial Acts enacted by the US government. This Act enables the US government to combine the Federal Trade Commission and the Department of Justice to enter into agreements with foreign antitrust investigating agencies of other countries. On the basis of this Act, the US government is at liberty to share their personal information with other countries, subject to certain conditions.

Over the years, antitrust laws have been enforced against many companies. For example, in the 1990s, the U.S. government sued Microsoft for violating the antitrust laws by using its dominant position in the market to unfairly restrict competition. The case ultimately resulted in a settlement that required Microsoft to change its business practices and provide greater access to its competitors.

More recently, companies such as Google, Facebook, and Amazon have come under scrutiny for potentially violating antitrust laws by engaging in practices that limit competition and harm consumers. For example, Google has faced accusations of unfairly promoting its own services over those of competitors in search results, while Amazon has been accused of using data from third-party sellers to create its own competing products.

In the years since these antitrust laws were enacted, they have been strengthened and expanded to meet the changing needs of the market. Today, the U.S. government continues to actively enforce antitrust laws, and violators can face stiff fines and other penalties. In addition to the federal antitrust laws, many states have their own antitrust laws and agencies that work to promote fair competition and protect consumers from abusive business practices.

In conclusion, the enactment of the Sherman Antitrust Act in 1890 marked a significant turning point in the regulation of business practices in the United States. Since then, a series of additional antitrust laws have been enacted to further protect consumers and promote competition in the market. While there ave been challenges and criticisms of these laws, they have played an important role in preventing the formation of monopolies and protecting consumers from unfair business practices.