Antitrust laws make headlines when major corporations, like those in the banking or airlines industry, plan on merging. Antitrust can be a complex area of law, requiring the use of mergers and acquisition expert witnesses, economists, and industry specific business expert witness in order to prove a case. But it’s not just big businesses that are impacted by antitrust law.
The goal of antitrust laws are to foster competition so the marketplace will have the greatest range of services and products with the widest range of quality and price. Antitrust laws seek to prevent monopolies and agreements among competitors to restrain trade (such as allocating markets, fixing prices or boycotting suppliers). An example of an illegal agreement is exchanging price or cost information and then acting in concert.
Depending on a number of factors, a small business may legally dominate the local market for a good or service. Some industries are more prone to antitrust issues, like those with a group of businesses that regularly bid on work, or if the market is controlled by a small number of businesses. Additional, industries with rare products also have increased risk of violation.
There are state and federal antitrust laws. The federal laws are broken down into the
- Sherman Antitrust Act
- A criminal law prohibiting all contracts, combinations and conspiracies that unreasonably restrain interstate and foreign trade, including agreements among competitors to fix prices, rig bids and allocate customers, which are punishable as felonies,
- Clayton Act
- A civil law prohibiting mergers or acquisitions that are likely to lessen competition and the
- Federal Trade Commission Act
- A civil law prohibiting unfair methods of competition in interstate commerce.
Depending on the statute, penalties include criminal prosecution, fines and if damages are proven, they are trebled. A business expert witness can opine on the industry standards and pricing practice to help prove or defend the case. And determining a fair economic damage amount will require testimony from an economist or a forensic accountant.
While federal laws get the most attention, your state laws may be more important in some cases. State laws may be more expansive than federal antitrust laws concerning the amount and details of the prohibited activity, according to the Washington State Office of the Attorney General, “While state and federal antitrust laws are conceptually similar, the codification of state antitrust laws varies widely from state to state. For example, some state antitrust laws, such as those in Washington, substantially track the language of their federal counterparts, whereas other states only incorporate select sections of federal antitrust laws, recite specific types of prohibited acts, or include new areas of substance entirely.”
Federal law violations can result in private lawsuits or investigations by the Federal Trade Commission (FTC). If you have a business client suffering at the hands of competitors, this is an area of law that may be worth looking into. The FTC has very useful resources on their website, including a guide to what to look for concerning antitrust violations and a chapter of their antitrust division manual. The guide might be particularly helpful when discussing issues with a client or potential client, as it spells out scenarios that the business may be dealing with.
A slow economy may encourage businesses to violate antitrust laws in order to generate profits. If your client is the victim of these kinds of practices, they, and the economy, may be a deadly one-two punch. With the help from industry specific expert witnesses, you may be able to shelter your client from this storm and restore it back in its proper position in the marketplace.