The concept of antitrust laws has become increasingly widely discussed of late, particularly with Google facing the most significant antitrust and monopoly-related charges filed in the US for decades.
Previously accused of harming competition in the Internet search field and breaching antitrust through its distribution agreements, Google has continued to face immense legal pressure and made users increasingly aware of their rights and control over personal online data.
But what exactly are antitrust laws, and associated concepts such as bid-rigging and monopolies? Let’s find out.
What are Antitrust Laws?
Antitrust laws may also be referred to as competition laws, and as such as statutes developed by the government to protect customers from predatory business practices.
Particularly prominent in the US and Europe, these laws ensure that fair competition exists in an open-market economy that’s largely free from government intervention, with any legislation expected to evolve in line with changing market conditions and developments.
Such laws are also applied to a wide range of business activities, including bid-rigging and the formation of monopolies (which we’ll touch on further below).
As a general rule, however, an absence of such laws would restrict competition in the open market, creating a scenario where prices soar and customers aren’t able to shop around for the best option.
What is Bid-Rigging?
One of the biggest focuses for any antitrust lawyer and associated legislation is bid-rigging, which is an illegal practice between two or more parties that collude to choose who will win a particular contract.
When making bids, the ‘losing’ parties will purposely submit lower offers in order to establish a predetermined winner, with this classed as a felony in the US and offset by stringent public tendering rules in the EU.
Bid rigging can also take different forms, including bid suppression (where competitors refrain from bidding so that a predetermined winner can prevail) and complementary bidding (where competitors collude to submit unreasonable and unacceptably high bids as a way of nullifying competition).
What About Monopolies?
Google’s main legal issue revolves around monopolies, which typically refer to the dominance of an industry or sector by one company at the expense of any fair market competition.
Microsoft also fell foul of antitrust monopoly laws, with the software giant found guilty of anti-competitive actions after forcing its own browsers upon computers where the Windows operating system was installed.
The role of regulators is to ensure that monopolies aren’t borne out of a naturally competitive environment, as any dominant market share must be acquired through business acumen and innovation as opposed to predatory business practices.
The 3 Big Antitrust Laws
We’ll close with the three major antitrust laws, which have been created to regulate business markets and the practices adopted by firms. These include:
- #1. The Sherman Antitrust Act: This was designed to prevent unreasonable ‘contract, combination and conspiracy in the restraint of trade’.
- #2. The Federal Trade Commission Act: This piece of legislation bans ‘unfair methods of competition’ and deceptive acts or practices across all licensed marketplaces.
- #3. The Clayton Antitrust Act: This addresses specific practices that the Sherman Anti-Trust Act may not address, including the prevention of mergers and acquisitions that may ‘substantially lessen competition or intend to create a monopoly’.