ch05 - Chapter 5 GOVERNMENT REGULATION OF COMPETITION AND...

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Unformatted text preview: Chapter 5 GOVERNMENT REGULATION OF COMPETITION AND PRICES Power to Regulate Business Regulation by government has occurred primarily to protect one group from the improper conduct of another group. Until the middle third of this century, regulation of business was primarily directed at protecting competitors from misconduct of other competitors. Beginning with the middle third of this century, regulation expanded in the interest of protecting consumers. 2 Power to Regulate Business The Sherman Antitrust Act prohibits conspiracies in restraint of trade and the monopolization of trade. The Clayton Act prohibits mergers or the acquisition of the assets of another corporation when this conduct would tend to lessen competition or give rise to a monopoly. 3 Regulation of Markets and Competition Regulation of Prices. Prohibited Price Fixing (Section 1 of Sherman Act). Prohibited Price Discrimination (Clayton Act & RobinsonPatman Act). Permitted Price Discrimination. Prevention of Monopolies and Combinations (Sherman Act). Monopolization (Market Power). Tying. 4 Power to Protect Business Some industries are exempt from the Sherman Act. To be illegal, restraint of interstate commerce must be unreasonable. Court applies the "rule of reason". 5 Remedies for Anticompetitive Behavior Criminal Penalties. Sherman Act provides for fine or imprisonment. Up to $10 million for corporation. Up to $350,000 and/or prison up to three years. Civil Penalties. Individual treble damages. Class Action suit. 6 ...
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This note was uploaded on 05/12/2010 for the course BUS 2241 taught by Professor Mcguinnes during the Spring '10 term at Valencia.

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