Competition Law Explained - Free Legal Resource on UpCounsel
Learn more about competition law and how it might relate to you.2 min read
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What is Competition Law?
Competition law is law that seeks to ensure the free market capitalism driving America by regulating anti-competitive conduct of companies. This is also known as antitrust law and is regulated by both public and private enforcement agencies.
Competition law is centered around prohibiting agreements or practices that restrict free trade and competition between businesses. The government will oversee all large agreements between companies to see if it will have a significant impact on the economy or create such a monopoly that the agreement could slow trade.
The government will particularly supervise not just agreements between large companies, but mergers and acquisitions between large corporations, including joint ventures. These transactions can be prohibited altogether, or approved with conditions such as an obligation to allow licenses or access to facilities so other businesses can continue competing.
Companies should notice if their firm is dominating a market or using anti-competitive practices that tend to lead to such a dominant position. Examples of this have to deal with pricing, refusal to deal and price gouging.
Both the Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ) Antitrust Division enforce the federal antitrust laws. The FTC focuses mostly on certain segments of the economy, particularly where consumer spending is high: health care, pharmaceuticals, professional services, food, energy and high-tech. However, the main goal of both agencies is still to protect the interests of consumers and ensure that entrepreneurs have an opportunity to compete in the market economy.
If the FTC believes that a person or a company has violated the law or that a proposed merger may violate the law, the agency may attempt to obtain a voluntary compliance with the company or else will file a complaint and/or seek injunctive relief.
State attorney generals can play an important role in antitrust law enforcement as well as private parties. Generally, most antitrust suits are bought by businesses and individuals seeking damages for violating the Sherman Act, the most notorious federal antitrust law. The government and private individuals have all the tools at their dispense to make a big impact on any company trying to take over too much of an industry.
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