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What are anti-trust laws?

On Behalf of | Jul 8, 2020 | Business Law

In the context of business law, a trust means something different than you are probably used to. A trust, in this sense, is a large corporation that controls most of the market share of a certain sector. Because this can discourage competition and create other ill effects, anti-trust laws exist to restrict the power of these corporations.

Keep reading for more information on anti-trust laws and how they apply to business law.

Preventing monopolies and protecting consumers

According to FindLaw, the main objective of anti-trust laws are to prevent monopolies. A monopoly exists when a business controls most of the products in a certain market. The reason this can be detrimental is that it forces competition out of the marketplace. Additionally, the corporation can set the price point of the products, which can discourage competition. This essentially gives consumers fewer choices for products and is harmful to a capitalist system.

Explaining noncompetition agreements

Noncompetition agreements also violate anti-trust laws. If your business owns most of a commodity on one side of the country, for example, you cannot enter into a non-compete agreement with another company to only supply the other side of the agreement. While it may seem like a valid solution, what occurs is now two companies control the price of the product instead of one. Additionally, anti-trust laws prevent companies from collaborating to set a minimum price in the same market.

If someone suspects that your company has a monopoly or is breaking anti-trust laws, they may file a lawsuit with the federal government. Pennsylvania also has state anti-trust laws.