Antitrust Regulations and Business Law Antitrust Regulations Essay

Download this Essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Essay:

Antitrust Regulations and Business Law

Antitrust regulations regulate economic activity in a way that encourages competition and discourages collusion between competitors. This collusion could be the result of horizontal mergers, price fixing, or even vertical contracts, which act to exclude competitors from a market. Antitrust regulations and actions are often hot button issues within the economics community as well as the business law field. Many different cultures have varying ides and understandings of these issues and may deal with them in completely different ways. This can, and does occur within the framework of U.S. business relations and exchanges, especially on the internet. As technologies change and adapt, antitrust laws and regulations need to be changed as well.

There is a mountain of evidence suggesting that while the current U.S. antitrust laws are quite effective on the macro level, many of these regulations were put in place before the economics of firms and competitive advantages were fully understood (Millon, 2009). Authors Sidek and Teece (2009) argue the same, stating that a more robust understanding needs to be arrived at before antitrust regulations can adequately control and regulate the markets in a way that benefits both the consumer and the producer (589).

Another common aspect of antitrust regulation concerns monopolies. Often times these can take the form of a company offering a good or service at a lower price when it is bundled. This type of antitrust behavior is not uncommon within the tech and IT industries, as evidenced a decade ago with Microsoft's antitrust lawsuit. This type of behavior also deters entry and induces exit of competition because the competition has to lower their price to compete with the monopoly. However, on the other side of the argument, bundling helps companies achieve preferred distribution for their products in many markets that require intensive distribution plans and huge amounts of resources. (Greenlee, Reitman, and Sibley, 2009). Often times companies will work to ride the line between monopoly and bundling in order to minimize their exposure to high distribution costs (Sidek and Teece, 2009).

Antitrust regulations have often been the subject of controversy as many business lawyers and economics scholars clash over the true intention of such regulations. Some business lawyers feel as though antitrust regulations are aimed at the overarching action of doing business, which some economics academics believe the focus is, and should be on each different entity that is doing business- the consumer, producer, manufacturer, and seller (Greenlee, Reitman, and Sibley, 2009). The former argument points to the law and related antitrust regulations as having a redistributive legacy, which to some business lawyers is a conflict of interest within the body of the law and the judiciary. Author Millon (2009) writes:

[There exists] a common thread that runs through law-and-economics business law scholarship. Working largely independently of each other, economically oriented scholars working in different areas have argued that the law should focus on the interests of a single constituency -- shareholders in corporate law, creditors in bankruptcy law, and consumers in antitrust law. Economic analysts thus have rejected arguments advanced by "progressive" scholars working in each of these areas that the law should instead concern itself with the full range of constituencies affected by business activity. The law-and-economics single constituency claim rests in part on skepticism about judicial competence, but the underlying premise is an objection to the use of law for redistributive purposes.

This statement can be viewed as a criticism of the current system of antitrust regulation within the Chicago School of economic thought. From a business law perspective, this criticism is relevant in that these regulations have been, and will continue to need to be adapted and changed as technologies and understandings change as well.

Millon (2009) goes on:

The primary value is efficiency, defined in terms of market-generated outcomes. It is argued here that this political commitment implies a strong tendency toward maintenance of the existing distribution of wealth, and that even more importantly, the single constituency claim may actually have redistributive implications. In each of these areas of business law, however, a regressive program favors owners of capital against those who are generally less well off, such as workers and small-business owners. In this way, the Chicago School of thought surrounding antitrust regulations has taken a back seat to a more dynamic understand and attempt to more accurately regulate and operate the markets within the U.S.

The U.S. regulatory bodies have also tried to come up with other alternatives to the still relatively static realm of antitrust law. One of these alternatives involves consumer choice, which reflects an absolute Capitalism that Americans have been known to appreciate. Authors Averitt and Lande (2007) explain, this consumer choice as a means of market regulations as being better than trying to regulate price and efficiency, especially for matter of non-price competition. Instead, this new model would value variety and circumstances that can be well assessed by consumer behavior, irrespective of the firm's behavior in price setting or bundling (Averitt and Lande, 2007, 175). This would be a bottom-up approach instead of the top-down approach the FTC and other regulatory bodies have supported for nearly one hundred years.

Millon's statements are quite compelling for anyone interested in the implications of antitrust regulations and their relationship to business law in the U.S. Also quite compelling is the notion that a set of laws has a specific economic or moral principle tied to it. In this case, the idea that antitrust regulations are a catalyst for the redistribution of wealth shows that there is more than one way to view this argument. He is also saying that from an enforcement perspective, the current antitrust laws rely heavily on the specificities and idiosyncrasies of the judiciary.

Sidek and Teece (2009) agree with Milton by adding, "Moreover, a complicating factor in the transformation of the law is the fact that the federal courts have, by embracing the reasoning in the Merger Guidelines promulgated several decades ago by the Antitrust Division and the Federal Trade Commission (FTC), caused antitrust case law to ossify around a decidedly static view of antitrust." (590). This suggests that the authoritative bodies within the U.S. government that regulate the markets and enforce antitrust laws are inherently flawed due to the lack of accurate and complete information as to the true economic behavior of firms in certain markets. Apparently when these academics speak, the governments listen, because in 2009, the FTC solicited comments and suggestions from the public relative to these types of regulatory actions and their results on many small to large sized firms doing business in the U.S. (Sidek and Teece, 2009). During this time the FTC also reviewed the case law surrounding these areas of antitrust regulation and consulted with many business attorneys and business owners to help establish a more accurate and adaptive policy stance.

From a business law perspective, the ever-changing world of technology represents an area where antitrust regulation has no clear focus or application, at least as far as the internet and communications-based media are concerned. This is largely because the internet has allowed large groups of people, both buyers and sellers, to come together in a virtual space to conduct business (Pressey and Ashton, 2009). It is far more difficult to identify and enforce antitrust regulations online, and as many scholars will admit, these market conditions can work to damage competitiveness of the entire market, even outside of internet sales and purchases. One alternative may be, as Averitt and Lande (2007) suggest, to allow consumer choice to play a more active role in the politics and dynamics of online antitrust and monopoly issues. This would allow for the multi-cultural influences to remain intact wile, at the same time, ensuring the U.S. antitrust values would be supported as well.

More specifically, authors Pressey and Ashton (2009) explain that websites like Linked-In and other social media sites encourage people to develop specific relationships with customers that can often include monopolies and other antitrust behavior. Also, because the internet, specifically these social media sites are international, it is difficult to enforce such regulations due to the differing nature of many different cultures. In China and Japan, where collusion is more culturally acceptable and normal, U.S. entrepreneurs and firms are able to circumvent the current antitrust regulations and policies (Pressey and Ashton, 2009). As technology inevitably advances, these and other business law concerns will likely come to the forefront of the economics and business communities.

In fact, Chinese companies are even influencing the way business law in the U.S. is adapting to these changes. Author Farmer (2010) explains, The life of the law has not been logic: it has been experience. The felt necessities of the time, the prevalent moral and political theories, intuitions of public policy...have had a good deal more to do than the syllogism in determining the rules by which men should be governed. The law embodies the story of a nation's development through many centuries, and it cannot be dealt with…[continue]

Cite This Essay:

"Antitrust Regulations And Business Law Antitrust Regulations" (2011, October 12) Retrieved December 10, 2016, from

"Antitrust Regulations And Business Law Antitrust Regulations" 12 October 2011. Web.10 December. 2016. <>

"Antitrust Regulations And Business Law Antitrust Regulations", 12 October 2011, Accessed.10 December. 2016,

Other Documents Pertaining To This Topic

  • Business Law When Most People Think of

    Business Law When most people think of securities fraud and corporate misconduct, they will often associate Enron to these ideas. This is because it went from being the tenth largest company in America to one the biggest bankruptcies in U.S. history. On surface, everything appeared to be fine. Until it was disclosed, that the firm was running out of cash and the executive officers were unloading their stock. (Eichenwald, 2005) This raised

  • Business Law Contract Analysis U Haul

    Independent dealers must sign a contract that sets forth the manner in which they will operate their rental centers. Often a small business owner will supplement their income be adding U-Hauls to their market mix. Independent contractors earn a commission on their sales. Each division of AMERCO has it own president. All of them must report to a Board of Directors. The Chairman of the Board and overall President is

  • Antitrust Case Against Apple

    Antitrust Laws: Apple's Case Competition is a vital element of any vibrant marketplace. Thanks to competition, both businesses and individuals get to benefit from lower prices, increased product variety, higher-quality commodities, and greater innovation. Antitrust laws are meant to ensure that consumers are protected from unfair business practices and anticompetitive mergers, and that consequently, effective levels of competition are created and sustained in the economy. Antitrust laws differ from country to country

  • Business Ethics Company Overview Ethics and Code

    Business Ethics Company Overview Ethics and Code of Conduct Guiding Principles Our Ideology; Our Objectives; Our Core Values that shape us; As a part of my Business Ethics lesson I have a task to criticize and improve my company's code of ethics, before doing that I want to briefly explain about my company; MLS Holding and what we do? The most effective statements in regard to business ethics are rooted in the strategic vision of an organization

  • Antitrust Law Remedies in Intellectual Property Cases

    Antitrust and Intellectual Property Antitrust Law Remedies in Intellectual Property Cases In any research paper it is important to first define the terms used prominently in order to make sure that the reader understands what is being said. In this case, the two terms that require definition are antitrust and intellectual property. According to a definition from Cornell University Law School "Trusts and monopolies are concentrations of economic power in the hands

  • Antitrust Law

    Antitrust laws are laws that were enacted to guarantee American consumers the right to expect the benefits of free and open competition. Such laws are enforced by the United States Department of Justice's antitrust division (Anonymous, 2010). There are numerous Acts that constitute the Antitrust Laws. These include the Sherman Act, Clayton Act, and the Robinson-Patman. Sherman Act, the primary federal antitrust provision, seeks to promote and protect competition by

  • Antitrust Laws in the United

    .. are not to be distinguished by any judgment regarding the wisdom or unwisdom, the rightness or wrongness, the selfishness or unselfishness of the end to which the particular union activities are the means.' The law, however, still bites on situations where trade unions and groups of employers conspire together to suppress or eliminate competition. In other words, businessmen are not entitled to take advantage of the relative immunity of labor

Read Full Essay
Copyright 2016 . All Rights Reserved