CLEP Principles of Marketing Study Notes

Sherman act prohibits contracts combinations or

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Sherman Act prohibits contracts, combinations, or conspiracies to restrain trade. Under this law, monopolies are illegal. Sherman Antitrust Act of 1890 prevents businesses from restraining trade and interstate commerce. Written in rather vague terms, so the Clayton Act was passed in 1914 to limit specific activities that tend to reduce competition. Clayton Act of 1914 prohibits price discrimination, tying and exclusive agreements, and the acquisition of stock in another corporation when the result is to substantially lessen competition or create a monopoly . Federal Trade Commission Act of 1914 created a federal agency which regulates marketing practices and prohibits unfair methods of competition. Passed in the same year as the Clayton Act, created the Federal Trade Commission to investigate and enforce laws such as the Sherman Antitrust Act and the Clayton Act. Robinson -Patman Act of 1936 prohibits price discrimination among wholesalers and retailers where the effect of such discrimination tends to reduce competition among the purchasers or gives one purchaser a competitive edge. Significant because it directly influences pricing policies. A firm cannot provide the same products to competing buyers at different prices unless it can be clearly justified.
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In 1994 the NAFTA (North American Free Trade Agreement) treaty went into effect linking the economies of the US, Mexico and Canada. Simplified export procedures and lowered tariffs on US goods entering Mexico. It also provided protection for US investment in Canada and Mexico. Tariffs refer to the taxes imposed on internationally traded commodities when they cross national boundaries. Imposed by governments on imports , they raise the prices of imported goods and thereby restrict their sale. Non-tariff barriers (NTBs) are restrictions placed on trade that do not involve a financial penalty . Include import quotas, anti-dumping laws, and special health and safety requirements on imported goods. Import quotas are quantitative restrictions on imports that may be expressed as individual units imported or as a total value of imports. Quotas are normally imposed on an annual basis and are often used as a means of protecting domestic industry from lower cost imports. It is a numerical limit placed on the quantity of a particular product or class of products. Dumping occurs when a company sells its products on international markets at prices below cost. Used to penetrate markets and increase market share. Once the company is established in the marketplace the price is increased. Governments often create anti-dumping laws to protect domestic industry from cheap imports. Anti-dumping legislation is used to protect the local industry and trade from predatory pricing practices by foreign companies. It may also be used to limit foreign competition in a market.
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