MONOPOLIES REGULATIONS UNDER ANTI-TRUST LAWS

Many countries have a wide array of rules and regulations so as to prevent consumers from malicious or unfair trade practices. As a result of which there are laws that aim to provide equal opportunities for similar businesses having the same line of the industry by stopping them from gaining excessive power over their competitions. These are called as Anti-trust Laws. India realised that it needed a stronger and well-equipped law to tackle complex problems resulting from the existing Monopolistic and Restrictive Trade Practices Act, 1956 (MRTP) and so, was taken over by The Competition Act, 2002 on March 1, 2009.The main objectives of this Act are:

1. To prevent monopolies and promote competition in the markets.
2. To protect the interests of the consumers.
3. To provide a framework for the establishment of the Competition Commission.
4. To protect the freedom of trade in the markets. 

Competition Commission is a statutory body that regulates the power to govern and implement the Competition Act and its penalties. It comprises a Chairman and a minimum of 2 board members and a maximum of 6 board members. They need to have expert knowledge in the related field with a minimum of 15 years of experience. Their objective and aim is to provide a fair and non-deceptive market to the Indian consumers, i.e. to provide a healthy and fair competitive market and penalise any action that violates the Competition Act, 2002.

The main purpose of Anti-trust laws is to prevent the business activities that either create or maintain a monopoly. They ensure that there is a fair market for all producers as well as consumers. If these laws did not prevail, then the consumers would be forced to pay exorbitant prices for a product having limited options or services. Anti-trust laws form the core basis of U.S. laws. There are three major Federal Anti-trust acts. These are:

1. The Sherman Anti-trust Act – This was Nations first anti-trust act passed in 1840. This act made it illegal for companies to enter agreements not to compete or abuse monopoly power. The consequences of violating this act leads tothe payment of a fine up to $ 100 million for a company and $ 1 million for individuals with a jail term up to 10 years.

2. The Federal Trade Commission Act – It was passed by Congress back in 1914, where the Federal Trade Commission committee was set up to prevent unfair, restrictive and deceptive trade practices that could harm the consumers. This, however, has no penalties.

3. The Clayton Act – This Act too, was passed in 1914. It prohibits any mergers or acquisitions that can “substantially lessen competition or tend to create a monopoly”. This protects American customers from such mergers or acquisitions that are likely to stifle competition. 

Anti-trust laws are thus applicable to a wide range of business activities and are not limited to bid-rigging, fixing prices, market allocation and monopolies. 

1. Bid rigging – This is an offence in the U.S. where two or more parties collude to choose who will win the bid. In this, the losing party will voluntarily make lower bids to let the winning party control over the deal. On practising this, there are fines as well as a jail term.

2. Price Fixing – This is an agreement between sellers or purchasers and the producers has to fix a price of a particular product or service. This phenomenon can either push the customers to pay an exorbitant price or force the competitors out of this business by laying meagre price. They are illegal under both state and federal anti-trust laws. Some of the examples are:

1. Deliberately reducing output or sales in order to charge a higher price.
2. Having common costs or mark ups.
3. Buying products from a supplier at the maximum price.
4. Establishing a common minimum price.

3. Market Allocation – It is an anti-competitive market where the companies divide markets amongst themselves. Each company is exclusively given its private market. In this type of a market usually, every competitor is demographically given their market where no other competitor will interfere or division of type of customers takes place, for instance, senior citizens, children etc.

4. Monopolies – As discussed earlier, that monopoly is an action wherein one industry cuts down the competition, thereby havingthe individual control over the market. That is to say that when one industry dominates over a particular product or service in the market, it is called a monopoly. There are various monopolistic behaviours that have grounds for legal action such as:

1. Exclusive Supply Agreements – This is an agreement where the seller is prevented from selling his products to different prospective buyers. It is where the buyer buys exclusively from the seller, a particular product. This prevents the seller’s competitors from competing for the buyers business. 

2. Tying Contract – In this contract when a monopolist who already dominates a particular product, but also wants to gain market shares of another product, he ties his shares of another product with his dominant one. In other words, it means that when a monopolist sells a product or service on a contingency, the buyer also agrees to buy or sell another product is called Typing contract.

3. Price Discrimination – That is when a seller sells similar goods to different buyers at different prices.

4. Refusal to Deal – It is on the monopolist’sdiscretion with whom they wish to carry further their business. However, if they try to prevent competition with their means of market dominance, this will be a felony.

With this, we can conclude that Anti-trust laws are crafted to protect the consumers from malicious trade practices with the help of The Sherman Act, The Clayton Act and The Federal Trade Commission Act. Through the enforcement of both civil and criminal offences such as bid-rigging, fixing of prices, market allocation, etc.