Antitrust laws are statutes that were established by the U.S federal government to protect the consumer from market dominance business practices by ensuring that fair competition exists in an open market. Without antitrust laws, therefore, a business monopoly would carry the day and hinder the production of new product and services. Monopoly is an industry or corporation that exists to dominate a free market and become large enough to own all the market in a particular supply of a given product. The monopoly exists to have total control of the market preventing other investors to do business in a given market. Antitrust laws prohibit practices of monopoly by prohibiting business practices that restrain trade and ensure there is a fair competition in the market (Long, 2018).
Antitrust laws Limit de-facto monopoly, this is the limitation that exists to limit people to start new businesses due to the high cost of starting the business and only allow specific business to operate in a given area. It also limits other investors from entering the market to protect the existing market. Antitrust laws regulate and allow investors to come in to exercise the right of a free market and compete with the existing market without any limitations of de-facto monopoly.
Antitrust protect business competitors from bid rigging. Bid rigging is a practice that exists between company to retain the market share and restrict any other or formulate practices that restrict other competitors from fair competition. For example, three companies may formulate practices that allow them to win BIDs in the market. As long each company A allows company B and company C to have an equal share of winning BIDS. The company plays this game to prevent equal competitions.
Antitrust break down the monopolistic who promotes politics in the free market by ensuring that only specific company benefits from the market. When existing businesses in a market formulate some policy to prevent others from penetrating the market this is called monopolistic competition.
Monopolies
Monopolies promote or inhibit competition in the market thus leading to high cost of goods to the consumers. Due to lack of competition, entry of new products and services are prohibited. This encourages continuity of inferior products and services in the market. Monopolies promote inferior behavior that creates fear to compete in the market. Dominance in the market encourages control of the market by increasing the cost of goods to benefits the business at will. It finds way around of inducing dependency by altering the law of supply and demand by reducing the supply to increase the demand thereby raising the cost of goods and services. Monopolies inhibit the entrance of new products and deny experimentation that can lead to new innovation. It determines what products and services are to be marketed in the same market as long the product does not contravene with its laws and practices (Long, 2018).
Natural monopolies
Not all monopolies are bad, some monopolies exist to protect the business from competitors and allow the business to recover from the huge cost of the business. Government agencies also operate monopolies businesses like energy sector and postal services. Some monopolies exist to serve the purpose of researching like research centers that only authorized to carry out research in a specific field. This allows the government to find a solution to a specific problem in a given field. Monopolizing energy sector and water supply serves the purpose of control to ensure the companies are compensated from huge spending in generating power energy and Water Company. These companies are regulated by the government to ensure that they promote and provide good services and do not contravene government regulations and policies of taking advantage of the present market (Long, 2018).
Three antitrust laws
To break monopolies, the antitrust law was created by three legislations. Sherman act, federal trade, and Clayton act.
Sherman act intended to prevent trade conspiracy, unreasonable contracts and any practices that would restrain trade. The acts prohibited monopolization or combination of bodies to monopolize the market. Contravening these acts would lead to severe consequences and huge fines (Kobayashi, 2002).
The federal trade act prohibits the unfair method of competition and deceptive business practices. This law allows the FTC to bring charges over contravening the law when the accused bridges the Sherman act. If the Jury is unable to prosecute against Sherman the FTC can bring accusation (Kobayashi, 2002).
Claytons act addresses practices that are not addressed by Sherman acts. These include; preventing business merger and accusation that would inhibit competition or promoting monopoly, preventing discriminatory prices that favor specific individual in the market between merchants, allowing the large companies to notify the government for the merger, allowing the third party to sue for any damage coursed when a company contravene Sherman act and Claytons act and allowing the complainant to obtain orders that prevent further damages from the defendant (Kobayashi, 2002).
The antitrust laws have encouraged fair competition and increase of trade in the united state. It has encouraged production of goods and penetration of new products in the market. Through innovation has led to an increase in technological products and innovative services. The antitrust law inception has protected the consumers’ welfare and protected competitors from market manipulation from the big fish in the market (Kobayashi, 2002).
Through antitrust laws, Microsoft was prohibited from exercising monopoly to use the PC operating system and preventing fair competition in the market. Also the large communication company AT&T was prohibited from exercising monopoly power after long operation in the united state. The company was broken into 22 diverse services and had to sell some of its assets to promote fair competition (Kobayashi, 2002).
Antitrust laws are statutes that were established by the U.S federal government to protect the consumer from market dominance business practices by ensuring that fair competition exists in an open market. Without antitrust laws, therefore, a business monopoly would carry the day and hinder the production of new product and services. Monopoly is an industry or corporation that exists to dominate a free market and become large enough to own all the market in a particular supply of a given product. The monopoly exists to have total control of the market preventing other investors to do business in a given market. Antitrust laws prohibit practices of monopoly by prohibiting business practices that restrain trade and ensure there is a fair competition in the market (Long, 2018).
Antitrust laws Limit de-facto monopoly, this is the limitation that exists to limit people to start new businesses due to the high cost of starting the business and only allow specific business to operate in a given area. It also limits other investors from entering the market to protect the existing market. Antitrust laws regulate and allow investors to come in to exercise the right of a free market and compete with the existing market without any limitations of de-facto monopoly.
Antitrust protect business competitors from bid rigging. Bid rigging is a practice that exists between company to retain the market share and restrict any other or formulate practices that restrict other competitors from fair competition. For example, three companies may formulate practices that allow them to win BIDs in the market. As long each company A allows company B and company C to have an equal share of winning BIDS. The company plays this game to prevent equal competitions.
Antitrust break down the monopolistic who promotes politics in the free market by ensuring that only specific company benefits from the market. When existing businesses in a market formulate some policy to prevent others from penetrating the market this is called monopolistic competition.
Monopolies
Monopolies promote or inhibit competition in the market thus leading to high cost of goods to the consumers. Due to lack of competition, entry of new products and services are prohibited. This encourages continuity of inferior products and services in the market. Monopolies promote inferior behavior that creates fear to compete in the market. Dominance in the market encourages control of the market by increasing the cost of goods to benefits the business at will. It finds way around of inducing dependency by altering the law of supply and demand by reducing the supply to increase the demand thereby raising the cost of goods and services. Monopolies inhibit the entrance of new products and deny experimentation that can lead to new innovation. It determines what products and services are to be marketed in the same market as long the product does not contravene with its laws and practices (Long, 2018).
Natural monopolies
Not all monopolies are bad, some monopolies exist to protect the business from competitors and allow the business to recover from the huge cost of the business. Government agencies also operate monopolies businesses like energy sector and postal services. Some monopolies exist to serve the purpose of researching like research centers that only authorized to carry out research in a specific field. This allows the government to find a solution to a specific problem in a given field. Monopolizing energy sector and water supply serves the purpose of control to ensure the companies are compensated from huge spending in generating power energy and Water Company. These companies are regulated by the government to ensure that they promote and provide good services and do not contravene government regulations and policies of taking advantage of the present market (Long, 2018).
Three antitrust laws
To break monopolies, the antitrust law was created by three legislations. Sherman act, federal trade, and Clayton act.
Sherman act intended to prevent trade conspiracy, unreasonable contracts and any practices that would restrain trade. The acts prohibited monopolization or combination of bodies to monopolize the market. Contravening these acts would lead to severe consequences and huge fines (Kobayashi, 2002).
The federal trade act prohibits the unfair method of competition and deceptive business practices. This law allows the FTC to bring charges over contravening the law when the accused bridges the Sherman act. If the Jury is unable to prosecute against Sherman the FTC can bring accusation (Kobayashi, 2002).
Claytons act addresses practices that are not addressed by Sherman acts. These include; preventing business merger and accusation that would inhibit competition or promoting monopoly, preventing discriminatory prices that favor specific individual in the market between merchants, allowing the large companies to notify the government for the merger, allowing the third party to sue for any damage coursed when a company contravene Sherman act and Claytons act and allowing the complainant to obtain orders that prevent further damages from the defendant (Kobayashi, 2002).
The antitrust laws have encouraged fair competition and increase of trade in the united state. It has encouraged production of goods and penetration of new products in the market. Through innovation has led to an increase in technological products and innovative services. The antitrust law inception has protected the consumers’ welfare and protected competitors from market manipulation from the big fish in the market (Kobayashi, 2002).
Through antitrust laws, Microsoft was prohibited from exercising monopoly to use the PC operating system and preventing fair competition in the market. Also the large communication company AT&T was prohibited from exercising monopoly power after long operation in the united state. The company was broken into 22 diverse services and had to sell some of its assets to promote fair competition (Kobayashi, 2002).