Antitrust laws are laws which are enacted to ensure free competition in the United States marketplace by regulating the ways in which companies are permitted to conduct their business. Antitrust laws prohibit practices which may stifle free competition, including:

How Do Antitrust Laws Apply to Business Practices?

The majority of the body of antitrust laws are found in the Sherman Act. This act is a federal statute which prohibits “every contract, combination, or conspiracy in restraint of trade,” as well as any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.”

The Supreme Court, however, held that the Sherman Act does not prohibit every restraint on trade but only those restraints which are unreasonable. Examples of unreasonable restraints may include:

  • Forcing or coercing an individual to cease doing business or to change their business so that they will not compete in the market;
  • Making an agreement to fix prices in order to force other competitors out of business;
  • Creating a monopoly;
  • Creating a non-compete clause or other contract provisions to keep another out of business; and
  • Tortious interference with a contract or business agreement that negatively affects another’s ability to do business freely.

What is an Antitrust Violation?

There are numerous ways in which a business enterprise may be in violation of antitrust laws. A court will examine any possible antitrust violations using the standard of “per se violations.”

Pursuant to this standard, all that is required to be proven in court is that the accused actually committed one of several per se violations. The intent of the accused individual or the effects of their actions are not relevant.

Examples of antitrust per se violations may include:

  • Price-fixing;
  • Lockup agreements;
  • Concerted refusals to deal; and
  • Mergers where a major, and the only, competitor is dissolved.

How Are Antitrust Laws Enforced?

Antitrust laws are enforced through the people and through the government. There are both civil and criminal penalties for a violation of antitrust laws.

An individual who is found to be in violation of antitrust laws may face penalties including:

  • Fines;
  • Damages awards; and
  • Prison time.

The government encourages private individuals to take action and to report when they discover an antitrust violation, which is why both companies and individuals are permitted to bring lawsuits for violations of antitrust laws. Additionally, state antitrust laws and federal antitrust laws provide for triple damages.

What Are Some Examples of Antitrust Laws Being Violated?

Examples of when antitrust laws are violated include, but are not limited to:

  • Large price changes of very similar product;
  • Suspicious statements from seller;
  • Company having low bidder on all contracts; and
  • Having large unexplainable dollar differences between bids.

What is an Unfair Competition Lawsuit?

The number of unfair competition lawsuits filed against businesses has risen in recent years. With each lawsuit, the definition of unfair competition expands.

Some common examples of of business practices which may result in unfair competition lawsuits include:

  • Misrepresentations to consumers;
  • Discriminatory treatment of consumers;
  • Advertisements expressing hostile treatment of competitors; and
  • Unreasonable non-compete clauses in employment contracts.

What Constitutes Unfair Competition?

It is important to note that federal laws and state laws address unfair competition differently. Pursuant to federal laws, business practices are unfair when they offend “an established public policy” or when the practices are “immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.”

Pursuant to many state laws, the laws governing unfair competition are considered to be very plaintiff friendly in that almost any business action may be considered unfair competition. Because of this, many state courts have begun using a rule of reason analysis.

When using this analysis, the motives of the accused wrongdoer as well as the utility of their conduct are weighed against the gravity of the harm which occurred to the alleged victim.

What are the Three Main Antitrust and Trade Regulation Laws?

There are three main laws which comprise antitrust laws in the United States. The agencies that enforce these three federal statutes are the Antitrust Division of the Justice Department or the Federal Trade Commission.

The three main antitrust and trade regulation laws include:

  • The Sherman Act of 1890;
  • The Clayton Act of 1914; and
  • The Federal Trade Commission Act.

The Sherman Act prohibits conspiracies or contracts which restrain trade as well as create monopolization. Violations of this act may result in substantial fines as well as criminal penalties, including possible incarceration.

The Clayton Act of 1914 governs specific types of illegal restraints which includes:

  • Exclusive dealing arrangements;
  • Tie-in sales;
  • Price discrimination;
  • Mergers and acquisitions; and
  • Interlocking directorates.

The Clayton Act only carries civil penalties. This Act provides for private lawsuits in federal court as well as for damages and steps to restrain future violations.

The Federal Trade Commission Act is a catch-all enactment that has been held to include all the prohibitions of the other antitrust laws. Additionally, this act may be used to fill what may appear to be loopholes in the more explicit regulatory statutes.

What is the Cartwright Act?

The Cartwright Act is the general antitrust law for the state of California. Pursuant to this act, it is illegal for two or more individuals or businesses to act together in order to:

  • Restrict trade;
  • Reduce production;
  • Increase prices;
  • Reduce competition;
  • Fix prices;
  • Agree not to sell a particular commodity;
  • Agree not to deal in the goods of a competitor; or
  • Tie contracts, which occurs when a buyer seeking one product or service must also buy a second product or service tied to the original product or service.

Who Has the Authority to Enforce Antitrust Laws?

The Federal Trade Commission (FTC) and the U.S. The Department of Justice (DOJ) share the authority to enforce antitrust laws. The FTC is permitted to file antitrust lawsuits either in administrative hearings or in federal court.

Only the DOJ is permitted to bring charges under the Sherman Act, which is the main antitrust law. In addition, pursuant to the Hart-Scott-Rodino Act, state attorney generals are permitted to file antitrust lawsuits in state court or in federal court.

What are Penalties for Violating Antitrust Laws?

The penalties for violating antitrust laws may include both criminal and civil penalties, which may include:

  • For violations of the Sherman Act, an individual may be fined up to $350,000 and sentenced to up to 3 years in prison. A company may be fined up to $10 million;
  • An individual who is injured by a violation of the Clayton Act may sue the violator in court for 3 times the amount of damages they actually suffered, known as treble-damages;
  • Violations of the Federal Trade Commission Act the FTC has the authority to issue an order that the violator stop its anticompetitive practices; and
  • Violations of state antitrust laws are often based on the same types of conduct as those in federal antitrust laws. Because of this, the penalties that state laws may impose are also similar and may range from criminal penalties to civil sanctions.

What Are the Penalties for Violating the Cartwright Act?

Pursuant to the Cartwright Act, any unreasonable restraint on competition is considered to be a violation of antitrust laws on its face. Individuals or businesses that violate the California Cartwright Act may be criminally prosecuted.

The punishments for these violations may include both imprisonment as well as fines. In addition, a court may order injunctive relief, which is an order for an individual or business to cease engaging in some action or to take some action.

In these cases, an injured party may also recover attorney’s fees.

Do I Need a Lawyer for my Cartwright Act Problem?

Both antitrust laws and unfair competition laws are very complex areas of law. If you have an issue, question, or concern related to the Cartwright Act, a business lawyer can help guide you through the legal process and ensure that all of your rights are protected.