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BPUB621.2003.Lecture.Slides.6.Antitrust.Section1

BPUB621.2003.Lecture.Slides.6.Antitrust.Section1 - [6(1...

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Wharton School: Government & Legal Environment of Business - BPUB 621 - Visiting Professor Martin K. Perry [6](1): Sherman Act - Section 1 Section 1: “Every contract, combination in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce among the several States, or with foreign nations, … is illegal” Criminal Enforcement: violation is a felony for individuals Civil Enforcement: injunctions Horizontal restraints Agreements between competitors Examples: price fixing, bid rigging, allocation of markets Vertical restraints Agreements between buyers and sellers Examples of agreements between manufacturers and distributors: Resale price maintenance and territorial restraints Exclusive dealing and tying arrangement
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Wharton School: Government & Legal Environment of Business - BPUB 621 - Visiting Professor Martin K. Perry [6](2): Restraints of Trade under Section 1 Supreme Court interpretations of Section 1 “unreasonable” restraints of trade Per Se Rule: naked restraints of trade are Illegal Per Se Anti-competitive effects are obvious from the agreement No reasonable pro-competitive effects Criminal penalties are likely Horizontal examples: price-fixing, bid-rigging, allocation of markets Vertical examples: minimum resale price maintenance Rule of Reason for other agreements Illegal if anti-competitive effects outweigh pro-competitive effects Criminal penalties are very unlikely Horizontal examples: joint ventures among competitors Vertical examples: exclusive territories, exclusive dealing, tying arrangements
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Wharton School: Government & Legal Environment of Business - BPUB 621 - Visiting Professor Martin K. Perry [6](3): Public Enforcement of Sherman Act Criminal Penalties: Antitrust Division, Department of Justice Fines up to $10 million for corporations misdemeanor for directors, officers, or agents of the corporation Fines up to $350,000 for individuals Prison terms up to 3 years Injunctions against future violations (Section 4 of Sherman Act) Divestitures of corporations Criminal Fines Improvements Act (1987) Alternative criminal fines up to twice the gain received by the violators or twice the loss of the victims Total fines have increased from $26.8 million in 1996 to $1.1 billion in 1999 Civil Remedies: Federal Trade Commission [FTC Act (1914)] Injunctions against future violations
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Wharton School: Government & Legal Environment of Business - BPUB 621 - Visiting Professor Martin K. Perry [6](4): Private Antitrust Lawsuits Private Persons: Sections 4 and 16 of the Clayton Act (1914) Section 4: private persons can sue for treble (3x) damages, and attorney’s fees Section 16: private persons can also obtain injunctions against future violations State Attorneys General: Hart-Scott-Rodino Act (1976) Amendments to Section 4 of the Clayton Act (1914) States can sue on behalf of the persons residing in their state (parens patriae) Obtain treble damages and attorney’s fees
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