Anti-trust legislation is designed to prevent businesses from price-setting or other secret collaboration which circumvents the natural forces of a free market economy and gives those engaging in the anti-trust conduct, a covert competitive edge.
A 1955 Attorney General of the United States paper entitled A Policy Against Undue Limitations on Competitive Conditions used these words to describe the raison d'être of anti-trust statutes:
"Antitrust is a distinctive American means for assuring the competitive
economy on which our political and social freedom under
representative government in part depend. These laws have helped
release energies essential to our leadership in industrial productivity
and technological development. They reinforce our ideal of
careers open to superior skills and talent, a crucial index of a free
society.
"As a result, the essentials of antitrust are today proclaimed
by both political parties as necessary to assure economic opportunity and some limitation on economic power incompatible with the maintenance
of competitive conditions....
"Competition is also desirable on principle and for its
own sake, like political liberty and because political liberty is jeopardized
if economic power drifts into relatively few hands.
"Antitrust also performs the function of keeping governing power in the hands
of politically responsible persons. Power to exclude someone from
trade, to regulate prices, to determine what shall be produced, is
governing power, whether exercised by public officials or by private
groups. In a democracy, such powers are entrusted only to elected
representatives of the governed....
"Intellectual and artistic creativeness can be imperilled
by the quality of sameness imposed on us when standards of thought
and form are delivered into the hands of a few businessmen."
The use of the word trust is unfortunate as the statute does not directly deal with trust except, perhaps, a political statement in regards to public confidence in the marketplace. In most other jurisdictions, restraint of trade legislation is known as anti-combines or competition legislation.
Some examples of anti-trust activity are:
- Sales at unreasonably low prices in order to cripple a competitor;
- Monopolies and combinations in restraint of trade;
- Price-fixing; and
- Intentional reduced prices in order to increase prices.
The American Department of Justice, Anti-Trust Division has more information, including these statements:
"Antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade, such as price-fixing conspiracies, corporate mergers likely to reduce the competitive vigor of particular markets, and predatory acts designed to achieve or maintain monopoly power."
"The Sherman Antitrust Act ... outlaws all contracts, combinations and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids and allocate customers.
"The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anti-competitive conduct.
"The Act is not violated simply when one firm's vigorous competition and lower prices take sales from its less efficient competitors—that is competition working properly."
REFERENCES:
- Attorney General's National Committee to Study Antitrust Laws, A Policy Against Undue Limitations on Competitive Conditions, page 2 (1955)