Key Harrington Barnes, PC

An overview of federal antitrust laws

Business owners in Texas may be interested to learn more about the origin and nature of federal antitrust laws. Comprised of three different acts, these laws have governed certain aspects of business practices in the United States for over 100 years. The Sherman Act, the Federal Trade Commission Act and the Clayton Act are primarily aimed at preserving fair competition in the marketplace and preventing monopolies from forming.

Although the Sherman Act originally outlawed all restraint of trade, the Supreme Court ruled that it only prohibits unreasonable restraint of trade. In other words, the formation of a business partnership might restrain trade somewhat, but not necessarily in a way that is considered unreasonable. Arrangements between companies to do things like fix prices or rig bids, on the other hand, are violations of the Sherman Act.

The Federal Trade Commission Act prohibits unfair competition and deceptive business practices. According to the Supreme Court, any violation of the Sherman Act is also a violation of business law under the FTC Act. In the Clayton Act, certain unlawful business practices that were not specifically addressed in the Sherman Act are prohibited. Some of these practices include discriminatory prices and mergers that might lead to the creation of a monopoly. Interlocking directorates, or the same person making decisions for multiple competing companies, are also banned by the Clayton Act.

A business owner may be able to avoid potential business disputes and other legal issues by becoming familiar with both federal and state antitrust laws. As part of the due diligence process that needs to be conducted prior to a merger or acquisition, an attorney can help determine what regulatory compliance may be necessary.

Source: Federal Trade Commission, "The Antitrust Laws", November 02, 2014

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