What are the Different Types of Antitrust Violations?

Mary McMahon
Mary McMahon

Antitrust violations all involve activities designed to restrict free trade through open competition, and they come in a number of varieties. Many nations have one or more laws detailing types of violations and the penalties. Antitrust violations can come with civil and criminal penalties including fines, jail time, forcible breakup of companies, and so forth. Businesses large and small can be charged and it is important for businesses to avoid engaging in activities that could be considered violations of antitrust law.

Businessman with a briefcase
Businessman with a briefcase

Most types of antitrust violations involve a certain element of conspiracy, where one or more companies work together. This can include price fixing, where companies meet to fix prices instead of allowing the free market to determine them, and contract rigging, where the contract bidding process is unfairly restricted, as for example when a company opens a contract for bid but has already chosen the company for the contract. Market allocation, where companies agree to limit themselves to certain markets, is another kind of antitrust violation involving a conspiracy.

The formation of monopolies is another example of a violation, although conspiracy is not always involved. Mergers and acquisitions can potentially become antitrust violations and some nations require companies to clear such activities with regulatory agencies if they are large. For example, one telecommunications company buying another might be a cause for concern, as it could create a dominant company or monopoly that limits consumer choice. Government authorities may refuse to approve such mergers and can also take action to break up companies that have gotten too large, such as the Bell System in the United States, a telecommunications company broken up under antitrust law because it was deemed a monopoly.

Legislation like the Sherman Antitrust Act, Clayton Act, and Federal Trade Commission Act in the United States covers antitrust violations and is designed to promote the maintenance of a free market. Government regulators have the power to investigate charges of conspiracy and fraud and can bring charges against individuals and companies involved in such activities.

Reduction of competition without fraud and conspiracy is not considered an antitrust violation. If a company makes a product well and figures out how to deliver it at a cheap price, thus driving out competition, this is considered a natural result of operating on a free market. Likewise, strategies like keeping prices low to eliminate competition and then raising them, while someone unscrupulous, are not illegal. In order to be considered antitrust violations, financial activities have to show clear evidence of an attempt to knowingly limit free competition.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

You might also Like

Readers Also Love

Discuss this Article

Post your comments
Forgot password?