Download Understanding Antitrust Laws: Sherman & Clayton Acts on Monopolies & Competition - Prof. S and more Study notes Business and Labour Law in PDF only on Docsity! Chapter 23 I. The Sherman Antitrust Act Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or person, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a felony (and is similarly punishable). Major provision of the Sherman act Section 1 Two or more persons Agreements Section 2 One person Structure of monopoly Jurisdictional requirements – substantially affects commerce II. Section I of the Sherman Act Per Se Violations v. The rule of Reason Per se – blantantly anticompetitive Rule of Reason Factors Purpose of arrangement Power of the parties Effect of their actions Whether a less restrictive means might have accomplished the same result Thin line between both Section 1- horizontal restraints – direct competitors Price fixing – per se U.S. v. Socony-Vacuum Oil Co. (1940) Major oil companies agreed to buy excess supplies from independent producers With intent to limit the supply of gasoline on the market May have been good reasons – avoid temporary shortages Group boycotts Agreement between 2 or more sellers To refuse to deal with, or boycott A particular person or firm Per se violation Horizontal market division Divide up territories or customers Trade associations Rule of reason generally applied If trade accusation practice that restrains trade benefits association and the public – may be deemed reasonable Joint ventures Rule of reason generally applied Unless price fixing or market divisions are involved Section 1 – Vertical Restraints – between firms at different levels in distribution process Territorial or customer restrictions To insulate dealers from direct competition with other dealers selling manufacturer’s products Manufacturer may institute territorial restrictions or attempt to ban wholesales or retailers from reselling product to certain classes of buyers Rule of reason Resale price maintenance agreements Manufacturer tells retailer at what price the retailer can sell the products Subject to rule of reason Leegin Creative Leather v PSKS, Inc. Leegin required resellers to sell brighton products at a minimum price PSKS was trying to sell below this price Leegin ceased selling products to PSKS PSKS filed a suit claiming actions constituted antitrust Court of appeals upheld decision Leegin appealed to supreme court Supreme court ruled in favor of Leegin III. Section 2 of the Sherman Act Monopolization – 1) possession of monopoly power in relevant market; 2) willful acquisition or maintenance of that power Monopoly power – control by single entity Power to control prices or exclude competition Even if not the sole seller in the market Courts look to at share of relevant market Product market Geographic market 70% or more Degree of interchangeability between products Relevant market – share of relevant market Relevant product market IV. The Clayton Act Specific practices that substantially reduce competition or could lead to monopoly power but not clearly prohibited by sherman act
