Antitrust law is the law of competition, and it is perhaps the least understood law of all. This article provides an overview and explanation of the essential principals of antitrust law, along with comments on certain recurring themes and recent developments in the voluminous case law by which the courts have struggled to give meaning and practical effect to the principal antitrust statutes.
What Is Antitrust Law? Broadly speaking, antitrust laws seek to promote fair competition on the merits and to protect consumers and wronged competitor businesses from anti-competitive business practices — practices undertaken in effort to undermine competitive commercial behavior in a given market or ...view middle of the document...
Allow me the following example to illustrate the point more vividly. If I own a restaurant in San Diego, and if I maliciously set fire to two other restaurants because I resent their flourishing success, I have clearly broken the law: I can be prosecuted criminally for arson and sued by the wronged, destroyed restaurants for intentional malfeasance, tortious interference, and very likely other civil wrongs. But my act, however evil, causes no harm to the thriving restaurant scene in San Diego. I have done nothing that even remotely upsets “competition on the merits” for restaurant dining in San Diego.
But suppose that my restaurant and the two other restaurants are all located on a remote island in the far away Pacific. If I burn them to the ground, then my restaurant alone will be the one restaurant remaining for the residents of this otherwise idyllic island. Suppose that I start charging them $50 for a plate of eggs and potatoes, quipping that “if they don’t like my service, they can eat at some other restaurant — oh, I forgot, there are no other restaurants!” My act of arson, if done under such circumstances, has likely caused harm to competition on the merits for restaurant services on this island.
Let’s suppose further that this remote Pacific Island is a territory of the United States and is therefore subject to U.S. antitrust law. When I am sued for redress under these laws, my clever antitrust attorneys will argue that, whatever else I might have done, I have not harmed competition on the merits because if I try to raise my prices for my restaurant services, others will soon establish competing restaurants to sell to customers who are disenchanted with my prices. This is the stuff of antitrust law, not mere arson and malicious misconduct. In this case, I would likely lose and be forced to pay three times the value of the harm that my misconduct has caused to competitors and customers alike, assuming the customers started a class action and my two ruined competitors also brought their own suit for lost profits. This is because a successful plaintiff in an antitrust case is entitled to treble damages and attorney’s fees and often can also obtain injunctive relief.
Suppose that I set the fire in San Diego, but I have done so because my restaurant and the two others are the only ones in the area that serve a rare delicacy cuisine known to its aficionados as “Fuji-style cooking”. In such a case my erstwhile competitors might sue me under the antitrust laws for causing antirust harm in the market for “Fuji-style cooking in the San Diego region”.
In other words, antitrust law is the law of competition, and it exists to resist harm done to an entire market, not harm done merely to a particular business or consumer.
The antitrust laws are set forth in various federal statutes, most notably the Sherman Act and the Clayton Act. There are also copycat statutes in virtually every state. The federal statutes use conspicuously general language...