Analytical Template: Impact on business that focus on profit over corporate citizenship and corporate social responsibility
BMAL 560
Name: John Doe Class: BMAL 560 Section: D01 Summer 2013
Critical Analysis Topic: The Impact of Antitrust on Business
PRINCIPLE:
Defined as laws that promote competition and prevent trusts, monopolies, or other business combinations that restrain trade (Graham, Baxter, & Davis, 2003)
Designed to strengthen and maintain fair competition in the economy
Legislation to control monopolies and restrictive practices in favor of competition
Prevents monopoly, prohibits anti-competitive behavior, and unfair and deceptive business practices
Fosters competition and protects consumers (Lawrence, Weber, & Post, 2005, p.188)
PRACTICE:
Antitrust or competition law is a generally accepted practice in the U.S. and other developed nations
Opinions vary on the effectiveness of antitrust laws due to vagueness in legislation
Antitrust has become a standard of business operations throughout the world
Derived from U.S. law originally structured to combat business trusts, commonly known as cartels
Viewed as an alternative to regulation
PARTICULARS:
Antitrust law originated in reaction to a public outcry over trusts – corporate monopolies at the turn of the twentieth century (1890)
Protect and preserve economic competition
Prohibit deceptive and unfair business practices
Protect small businesses from economic pressures exerted by big business competition
Preserve values and customs of rural America (Lawrence, Weber, & Post, 2005, p.192-193)
Five (5) major issues of antitrust policy (Meier et al, 1998, p.75-108)
Monopolies and trusts
Collusive behavior
Mergers
Price discrimination
Exclusionary practices
Prohibited activities include (Antitrust Resource Manual, n.d., n.p.)
Bid rigging; form of price fixing and market allocation
Predatory pricing; practice of selling a products at low prices with intent of driving competitors out of the market, creates a barrier to market entry
Price fixing; agreement between business competitors regarding pricing
Tying; practice of making sale of one good conditional on purchase of another
Vendor lock-in; situation in which a customer is dependent on a vendor
Geographic allocation; agreement between competitors not to compete within territories
Walker process fraud; illegal monopolization through maintenance and enforcement of a patent obtained via fraud
PERSONS:
Champions of Antitrust: (Werden, 1992)
Senator John Sherman (Ohio); sponsored legislation – led to Sherman Antitrust Act
Congressman Henry De Lamar Clayton (Alabama); sponsored legislation – led to Clayton Antitrust Act, also known as the Antimerger Act
Senator Joseph Robinson (Arkansas) and Congressman John Wright Patman (Texas); sponsored legislation – led to Robinson-Patman Act
Congressman Emanuel Celler (New York) and Senator Carey Kefauver (Tennessee); sponsored legislation – led to Celler-Kefauver Act
Senator Philip Hart (Michigan), Senator Hugh Scott (Pennsylvania), and Congressman Peter Rodino (New Jersey); sponsored legislation – led to Antitrust Improvements Act, also known as the HSR Act
Small businesses
United States Department of Justice Antitrust Division; enforces antitrust laws
Federal Trade Commission; enforces antitrust laws
American Bar Association Section of Antitrust Law
Critics of Antitrust: (Werden, 1992)
Milton Friedman, author of The Business Community’s Suicidal Impulse causes that antitrust laws do more harm than good
Thomas Sowell argues that antitrust doesn’t stimulate true market competition
Alan Greenspan, former Federal Reserve chair and author of essay titled Antitrust argues that the very existence of antitrust laws discourages business from socially useful activity; stifling innovation and harming society
Chicago School of Economics argues that empirical evidence shows that “predatory pricing” does not work; suspicious and critical of government intervention in economy
Large businesses and corporations
PERIOD:
1890 – Sherman Antitrust Act; considered the foundation of U.S. antitrust regulation
1914 – Clayton Antitrust Act; clarified ambiguities and uncertainties of Sherman Antitrust Act and prohibits unfair practices
1914 – Federal Trade Commission Act; established the Federal Trade Commission (FTC) as enforcement agency and prohibited unfair competition
1936 – Robinson-Patman Act; amended the Clayton Antitrust Act and prohibited anticompetitive practices in price discrimination
1950 – Celler-Kefauver Antimerger Act; reformed and strengthened Clayton Antitrust Act by preventing certain types of asset acquisitions and mergers that limit competition
1976 – Congress published the Antitrust Improvements Act to strengthen government’s enforcement of antitrust laws
2004 – Antitrust Criminal Penalty Enhancement and Reform Act; increased maximum criminal penalty (Freyer, 1992)
PLACES:
United States has longest standing policy on antitrust
Antitrust received attention in Europe following WWII (Freyer, 1992)
Essential and pertinent countries involved in antitrust or competition laws: United States, Canada, European Economic Community, Japan, Pakistan, Russia and other Soviet States, and other industrialized developed nations. FTC, Dept of Justice, American Bar Association
Commission of European Communities, also known as European Economic Community
Fair Trade Commission – Japan
Combines Investigation Act – Canada
All organizations seek rules of fair trade and competition (Meier et al, 1998, p.75-108)
PHRASES:
U.S. Supreme Court calls antitrust a “Charter of Freedom” (Freyer, 1992)
Called the "Bill of Rights" and "Magna Carta" of the American system of free enterprise
Known as “Trusts Busters” due to its history of deregulation
Railroad Industry
Standard Oil Company
American Tobacco Company
United States Steel Corporation
Alcoa Aluminum
DuPont Chemicals
American Telephone & Telegraph (AT&T) Company
Microsoft Corporation (Meier et al, 1998, p.75-108)
Business trusts: denotes big business
Cartels: denotes big business
Competition law: name given to antitrust in other countries
PICTURES:
“There is considerable controversy amongWTO members, in green, whether competition law should form part of the agreements” (“Competition Law”, n.d.)
“The economist's depiction of deadweight loss to efficiency that monopolies cause” (“Competition Law”, n.d.).
PROSPECTS:
Benefits Achieved: (Lawrence, Weber, & Post, 2005, p. 192)
Disband monopolistic activities through deregulation
Enhances interstate and international commerce
Ensures competitive industry and economy
Preserves competitive market prices
Protects consumers against unfair business practices
Protects consumers purchasing power by saving jobs and businesses
Restricts price discrimination unless justified by cost
Competition promoted fosters technological innovation
Explained Use: (Meier et al, 1998, p.75-108)
Enables federal government to bring litigation against businesses
Enables state government to bring litigation against businesses
Enables private citizens to bring litigation against businesses through state
Induces competition and cooperation through harassment, harm, and extortion
Prohibits use of power to control marketplace
Opposing Viewpoints and Alternatives: (Werden, 1992)
Antitrust laws do more harm than good
Antitrust doesn’t stimulate true competition
Existence of antitrust laws discourages business from socially useful activity
Antitrust’ “predatory pricing” is ineffective and does not work
Suspicious and critical of government intervention in economy
Let the market and economy self-regulate
Impact of antitrust policy on the competitiveness of U.S. firms internationally
Economic concentration eliminates effective price competition and reduces consumer choices (Lawrence, Weber, & Post, 2005, p.196-197)
PROBLEMS:
Enforcement is scarce and sketchy
Litigation is lengthy and requires extensive time and money
Interpretation and vagueness of act; businesses unclear on provisions
Cases examined and judged under a “rule of reason” analysis (An Antitrust Primer, 2005.)
Insufficient resources to implement provisions
Subject to bias and inaccurate information
Challenged since inception due to language ambiguities
Forever balanced between being too wide-reaching and too narrow in scope
PERFORMANCE:
Very effective in deregulation and as an anti-union tool
Used as a tool to induce cooperation through harassment and harm
Presidents Theodore Roosevelt and William Taft sued 120 companies under provisions of the Sherman Antitrust Act (Werden, 1992)
U.S. Supreme Court (1911) agreed that Standard Oil violated the Sherman Antitrust Act
In 1982 Reagan administration used Sherman Antitrust Act to dismantle AT&T
In 1999 Department of Justice sued Microsoft under Antitrust Act provisions
Protects competitive process of U.S. economy
Hailed as a “consumer welfare prescription” by U.S. Supreme Court (DeMasi, 2007, p.36)
Information and knowledge will offer enhanced perspective on provisions
Information and knowledge will offer an effective market work climate
Evolves to meet the challenges of an ever-changing social world
PUBLICATIONS:
References Cited:
An Antitrust Primer (2005). Retrieved from http://www.ftc.gov.bc/compguide/antitrust.htm
This publication describes details about various problems related to litigation. The author propses that litigation is lengthy and requires extensive time and money.
Antitrust resource manual: Identifying Sherman Act violations (n.d.). Retrieved from http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title7/ant00008.htm
This manual provides information on the Sherman Act. It details various violations and how they apply to the issue of antitrust, including how the 1982 Reagan administration used Sherman Antitrust Act to dismantle AT&T.
Competition Law (n.d.). Retrieved from www.Antitrust.org
This article provides detailed information related to competition law. It provides information related to the Microsoft antitrust issue of 1999.
DeMasi, K. (2007). Tried and trusted. Lawyer, 21(2), 36-37. doi:10.1037/1528-3542.6.2.257
This article provides detailed information related to antitrust law. It provides information related to the antitrust issue from the early 1900s to today.
Freyer, T. (1992). Regulating big business: Antitrust in Great Britain and America, 1880-1990. New York: Cambridge University Press.
This publication provides details regarding regulations in America and Great Britain. It details the issues of Antitrust Criminal Penalty Enhancement and Reform Act and how it applies to regulations, as a whole.
Graham, B., Baxter, R. & Davis, E. (2003). Dictionary of economics, (4th ed.). Princeton, NJ: Bloomberg Press.
This publication provides details on the issue of economics and breaks down the timeline, as it is related to regulations in the field.
Werden, G. J. (1992). The history of antitrust market delineation. Marquette Law Review, 76, 123-215. doi:10.1016/j.jns.2004.11.007
This publication focuses on market delineation. It provides a detailed timeline that lists the influential movements in the antitrust regulation.
Web Sites and Internet Resources:
http://www.abanet.org/antitrust
Details regarding current antitrust laws.
http://www.antitrustinstitute.org/Antitrust_Resources/Cases
Source for a variety of cases related directly to antitrust law.
http://www.econlib.org/library/ENC/Antitrust
Various articles related to the basic issue of antitrust law in the United States of America.
http://www.ftc.gov
The official site for the FTC. Provides current rules and regulations.
http://www.law.cornell.edu/wex/index.php/Antitrust#Federal_Statutes
A list of the Federal Statutes related to antitrust law.
http://www.ll.georgetown.edu/intl/guides/AntitrustLaw.cfm
Details regarding various aspects of antitrust law.
Journals, Periodicals, Brochures, etc:
Antitrust Insights
Antitrust Law Journal
Antitrust Magazine
Antitrust Review Weekly
Global Antitrust Weekly
The Antitrust Source
Washington Post Special Report on Antitrust
Book Suggestions:
Armentano, D. T. (1996). Antitrust and monopoly. Oakland, CA: Independent Institute.
Criminal antitrust litigation handbook (2nd ed.). (2006). Portland, OR: Book News, Inc.
Gordon, R. (2002). Antitrust abuse in the new economy: the Microsoft case. Northampton, MA: Edward Elgar.
Stelzer, I. M. (1966). Selected antitrust cases: Landmark decisions (3rd ed.). Homewood, IL: R.D. Irwin
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