BSLW6604 Lecture Notes - Lecture 11: The Possession, Profit Maximization, Clayton Antitrust Act

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Antitrust Law
1. Antitrust Law
a. Overview
i. The target of antitrust law (competition law) is excessive market power, whether
in the hands of a single firm or a group of firms that jointly acquire such market
power through anticompetitive agreements
ii. Market power occurs when consumers have few if any alternatives to the seller’s
product, thus enabling the seller to dictate terms based on profit maximization
rather than competitive pressure
1. Two general consequences of market power
a. Higher prices
b. Amount of good or service produced for and purchased by
consumers will fall
b. Monopoly
i. A description of a market condition where all or nearly all of an article of trade or
commerce within a community or district is brought within the control of one
person or company, thereby excluding competition or free traffic in that article
c. Antitrust Law & Statutes
i. 1880s The Federal Government and states developed legislation to promote
competition and prevent monopolies
ii. In 1890 Congress passed the Sherman Act: restraint of trade
iii. Each state has also passed legislation that mirrors the Sherman Act
iv. The Clayton Act was passed in 1914 due to vagueness of Sherman Act
v. Monopoly: exclusive control by on group of the means of producing or selling a
product
d. Sherman and Clayton Acts
i. Sherman Act SS 1: Restraint of trade
ii. Sherman Act SS 2: Monopolies
iii. Clayton Acct SS 4: Treble damages for Sherman Act violations
iv. Clayton Act SS 6: Statutory Labor Exemption
2. The Sherman Act (1890)
a. SS 1: Makes illegal ant contract, combination, or conspiracy in restraint of trade or
commerce
i. Violation requires proof of three elements
1. The existence of an agreement among two or more parties
a. There must be a combination between parties
b. They must have acted in concert
c. They must have engaged in a conspiracy
2. The activity unreasonably restrains trade
a. The challenged conduct’s anti-competitive results outweigh the
conduct’s pro-competitive results
i. “per se rule”
1. Northern Pacific vs. US, 356 US 1 (1958)
a. “There are certain agreements of
practices because of their pernicious
effect on competition and lack of any
redeeming virtue are conclusively
presumed to be unreasonable and
therefore illegal without elaborate
inquiry as to the precise harm they have
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