3. The owner of the Thomas Car Wash believes that the relationship between the number of cars washed and labor input is Q = XXXXXXXXXXL – 0.3 L 2 , Where Q is the number of cars washed per hour, and L...

STUDENT NAME:
TOPIC: ANTI TRUST LAW
Atl has a long history in USA and this one of the few countries where this law exists and is strictly enforced. The bedrock of all laws in this field is the Sherman Antitrust Act, of 1890. It was enacted to fight the growing might of “business trusts” in US economy rampant in the late 19th century. It prohibits two kinds of conduct. one, ‘[e]very contract, combination, in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations.’ is deemed illegal. Two, it does not allow any efforts that ‘monopolize, . . . attempt[s] to monopolize, or . . . conspir[acies] … to monopolize any part of the trade or commerce among the several States, or with foreign nations’ . Any violation of the Act invokes civil and criminal penalties. More teeth was given to the anti trust laws in 1914 in the form of two Acts. One Federal Trade Commission Act, created the Federal Trade Commission and was vested with the authority to enforce antitrust laws. Two, to supplement the Sherman Law , the Clayton Antitrust Act, was enacted. It prohibited newer forms of conduct, that include ‘mergers and acquisitions where the effect may substantially lessen competition’. This law has been revised and updated many times (Robinson-Pitman Act of 1936, Hart-Scott-Rodin Act in 1976) to stay relevant and up to date in a business environment that is getting more complicated and globalised each day. Many states have their own anti trust laws, that ‘prohibit anticompetitive conduct affecting commerce within their states and to supplement enforcement of federal antitrust laws.’ At a
oad level the federal and State laws are similar, but in some cases the latter may even be more substantive than federal laws.

The FTC is the main authority the covers and fights against a range of behaviours that restrict competition or are anti competitive. The Sherman Act is the guide for any FTC action, as it does not specifically lay out what conduct is illegal. This flexibility has suited the FTC that is open/ free to interpret evolving business activities that can be deemed anti competitive. The courts are free to interpret the Law and pass judgements on the merit of each case. The basic fundamental objective is to protect competition, and not the competitors. Broadly speaking Sherman Law prohibits the following types of conduct:
Section 1 of the Sherman Act prohibits ‘contracts, combinations or conspiracies in unreasonable restraint of Trade’. Any unreasonable agreement that harms the competitive process is deemed actionable. Using a per se analysis , price fixing, bid rigging, market and/or customer allocations along with group boycotts are harmful to competitions and are prohibited outright. In some cases a
oader’ rule of reason’ analysis is used that covers other types of agreements. In these cases the effect on competition is ambiguous and a
oader evaluation of the situation s required compared to per se rule cases. This typically involves weighing the pros and cons of an agreement/ a
angement between 2 or more business firms/ entities. If the costs outweigh the benefits, the agreement is termed an illegal restraint of trade. Some of these agreements include restraints in the supply chain-vertical relationships between buyer and supplier. Vertical restraints include agreements about price/sales te
itory/ display techniques of a retailer. An agreement on resale price maintenance, in terms of fixing maximum price support or minimum price support is also deemed anticompetitive and liable for action. The law also prohibits exclusive dealing, where a retailer agrees to sell only the supplier’s products and no...