Antitrust laws cover a variety of business transactions

In last week's post, we discussed how San Jose has filed an appeal to the United States Supreme Court regarding Major League Baseball and antitrust laws. The antitrust laws in this country are meant to help stop illegal mergers and business practices. There are three core antitrust laws on the federal level: the Sherman Act, the Federal Trade Commission Act and the Clayton Act.

The Sherman Act prohibits monopolization and several aspects of potential monopolization. It also prohibits contracts, combinations or conspiracies that lead to trade restraint. This act has very severe penalties for entities that violate the law. Criminal penalties of up to $1 million for individuals or $100 million for corporations are possible. Those amounts might be increased in some cases. Along with those penalties, up to 10 years in prison is possible.

The Federal Trade Commission Act is an act that the FTC can use to stop unfair competition or deceptive acts. The Supreme Court has ruled that all violations of the Sherman Act violate the FTC Act, so this allows the FTC to bring cases that involve these practices.

The Clayton Act covers some practices, such as interlocking directorates and mergers, that aren't prohibited by the Sherman Act. This act notes that acquisitions and mergers that might lessen competition or that tend to create a monopoly are prohibited.

As you can tell, these antitrust laws provide protections against monopolies. These laws mean that business decisions like acquisitions and mergers mustn't violate the laws. Penalties for violating the laws are serious, so businesses considering these types of business deals should ensure they aren't violating the laws.

Source: Federal Trade Commission, "The Antitrust Laws," accessed May. 01, 2015

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