Antitrust (Price Fixing)

Brussels: In what is believed to be the largest penalty ever delivered in an antitrust case, the European Commission today slapped computer chip maker Intel a record $1.45 billion fine for abusing its market dominance in a bid to shut out rival AMD, according to a story this morning in the New York Times. [ Read More ]

Houston, TX: In what is considered a first of its kind, a community hospital was accused of violating the Antitrust Act and antitrust laws when it allegedly tried to shut out a competing, physician-owned hospital—a violation, it has been reported, of antitrust policy. [ Read More ]

Windsor, ON: Back in the day, before the Toronto Maple Leafs hockey team moved to the Air Canada Centre, shady characters would stand outside the old Maple Leaf Gardens on game night, puffs of frosty breath floating in the chilly air as they barked, “Golds, Golds, Blues, Blues” referring to the color-price coded seats inside the historic arena. [ Read More ]

Price fixing occurs when competing sellers agree on what prices to charge - i.e. agreeing to not sell below a certain price. Bid rigging happens when firms agree to bid such that a designated firm submits the winning bid. Customer allocation involves arrangements between competitors to split up customers, such as by geographic area, to reduce to eliminate competition.

Companies violating antitrust laws are subject to criminal suits that can lead to jail time and large fines. Or, a civil action can be filed asking the court to compensate for past violations, and forbidding further violations.

Individual violators can be fined up to $1 million and sentenced up to 10 years prison, and corporations can be fined up to $100 million for each offense.

Price fixing, bid rigging and customer allocation cause great harm to consumers and taxpayers by causing them to pay more for products and services, and by depriving them of the benefits of competition. Antitrust laws can save consumers billions of dollars in illegal overcharges by making sure people benefit from competitive pricing for the goods and services they purchase.

Cases of antitrust behavior have been tried against the soft drink, vitamin, trash hauling, road building, electrical contracting, fax paper, explosives, plumbing supplies, doors, carpet, bread and software industries. Private individuals who claim damages, can bring a suit against another individual, a corporation, or corporations - a very effective way to deter antitrust criminal activity.

Because price fixing, bid rigging and customer allocation are all secret behaviors, the antitrust agencies rely heavily on complaints received by consumers, or people in business.

There are three major federal antitrust laws: the Sherman Antitrust Act, the Clayton Act and the Federal Trade Commission Act.

The Sherman Act (1890) outlaws all contracts, combinations and conspiracies that unreasonably restrain interstate and foreign trade, including fixing prices, rigging bids and allocating customers. The Sherman Act also makes it a crime to monopolize any part of interstate commerce. A monopoly occurs when one firm gains control of a market sector by supressing competition using illegal conduct.

The Clayton Act (1914) prohibits mergers or acquisitions that are likely to lessen competition and thereby increase prices to consumers. All persons considering a merger or acquisition above a certain size must notify the Antitrust Division and the Federal Trade Commission.

The Federal Trade Commission Act prohibits unfair methods of competition in interstate commerce.

Both the Clayton Act and the Federal Trade Commission Act carry no criminal penalties, and are tried as civil cases.