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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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