Antitrust practices Essay
Antitrust practices are practices carried on by businesses that end up destroying perfect competition in the market. Antitrust laws are laws prepared to seek and promote healthy market competition by preventing anti-competitive practices by companies. Some of the illegal practices that constitute to antitrust behavior include corporate mergers, monopolies and price fixing conspiracies (Bailey, 2010). The Clayton Act of 1914 was passed by the U.S Congress. It was an antitrust law that was amended to stop and prevent practices that led to unhealthy competition in the market. The Clayton Act was amended in order to complement an earlier version of the antitrust law referred to as the Sherman antitrust Act of 1980. This was a federal law that sought to prevent practices that were harmful to consumers such as cartels, monopolies and other unfair business practices (California Association of REALTORS, 2005).
One of the recent firms to be investigated for antitrust behavior is Google Company that leads the online searching industry. According to Weiss (2014), the firm recently was being investigated by Competition Commission of India (CCI) for claims that it abused its dominance in the online search engine industry by mainly promoting its own services over those of its rivals. This reason is considered to create unhealthy competition in the business as the search engine company dominates its rivals in what is considered almost a monopolistic market. Antitrust behavior brings about both pecuniary and non-pecuniary costs. Since it damages healthy competition in the market, monopolies can result and this has adverse effects to the prices of commodities. The products end up becoming costly and expensive for the customers and, therefore, affecting the society negatively (Bailey, 2010). On the other hand, antitrust behavior leads to the output of products falling below the market competitive level and this is mainly witnessed in monopolistic markets. Then again, the antitrust practices can be costly for any company that has engaged in them since if investigations prove that the company is guilty of the said acts then heavy penalties can be imposed on them. Furthermore, this can ruin the reputation of any company and, therefore, ending up losing its customers (Bailey, 2010).
Monopolies and Oligopolies
Monopolies and oligopolies are not always good for the society. Their presence in any market simply means they have all the power to control the prices of their products and services. This is not favorable to the customers since prices can always go up any time especially when the demand for certain commodities is high. One good example of an oligopoly is the Coca Cola and Pepsi Companies. These are the world’s largest beverage companies and demand for their products is never decreasing. However, these two companies represent a market with few suppliers while the consumers are many. They have all the power to dictate their products’ prices and the consumers have no power whatsoever (Hovenkamp, 2011). On the other hand, some government monopolies can be considered beneficial to the members of the society. Many governments in the current world control the production and supply of electricity and other forms of energy. This is useful because the governments aim at providing such services to the citizens at affordable prices and across the countries. It is the responsibility of the government to enhance infrastructure development in the country and, therefore, running such sectors of the economy can be beneficial to consumers.
In conclusion, it is important to point out that antitrust practices are unwanted behaviors since they destroy healthy competition among businesses. However, the law is strict on companies that engage in these practices and heavy penalties can be imposed on them. Antitrust practices include price fixing, corporate mergers and creation of monopolies (Reeves, 2010).