The System Of Competition And Antitrust Laws And Policies In The United States
For years and centuries, the developed world sought to make its economy fair, competitive, and just for each and every market player. Dozens of laws were passed in the United States to further fair, balanced, and competitive business practices. The history of competitive policies and antitrust practices in the United States has dates back to the Sherman Antitrust Act passed in 1890. Its main purpose was to prevent large organizations from conquering a greater share of markets at the expense of smaller businesses. With time, a separate system of laws was enforced, with the goal of securing American markets from unfair imbalances. Unfortunately, the effectiveness of these laws and policies leaves some room for improvements. The complexities of the legal process, the permissiveness of the existing laws in relation to naturally growing monopolies, as well as the rise of the new knowledge-based economy reduce the effectiveness of the existing antitrust regime and call for the need to pass new laws and regulations in this field.
The system of competition and antitrust laws and policies in the United States is rather complex. According to Fox (1997), the American antitrust system is designed primarily to protect consumer wellbeing, welfare, and right to use the advantages of fair competition. Here, consumer wellbeing and welfare are interpreted as the right to choose the most suitable option among a variety of products and purchase them at the most reasonable price (Fox, 1997). As such, the fairness of business practices is interpreted in light of the impacts they have on consumer welfare. Antitrust policies in the U.S. are only indirectly related to the importance of business efficiency, since competitive markets are automatically assumed to be efficient (Fox, 1997). From the Sherman Act of 1890 until present, the United States has been trying hard to create and advance an image of an ideally competitive market. The country has accomplished quite a lot in its striving to protect consumers from the undesirable effects of unfair business practices, but the complexity of the antitrust system and its relative weakness in the face of the new knowledge economy cannot be ignored.
One of the chief causes of ineffectiveness in antitrust policies and business laws in the United States is an extremely complex system of enforcement and litigation. The competition policy in the U.S. is being enforced by numerous agencies and responsible bodies. At the federal level, the Federal Trade Commission and the Department of Justice are collectively responsible for enforcing fair and just business practices (Fox, 1997). Because the policies and principles followed by the agencies are not always congruent, businesses in the United States often face difficulties with using the existing laws and regulations to defend their practices (Fox, 1997). Meanwhile, state courts and numerous industry organizations seek to ensure their participation in the antitrust system, and the effects they have on businesses can be quite controversial. Consequently, businesses often have to float among various perspectives and emphases on the antitrust laws, as well as the policies and priorities used by the respective agencies to protect their interests.
According to McConnell, Brue and Flynn (2012), the policies and laws promoting fair business practices in the U.S. have been only partially effective. The antitrust policy has failed to restrict the growth of monopolies that result from the natural expansion of firms (McConnell et al., 2012). The policy has been quite successful in managing and preventing abusive and predatory behaviors among monopolies, but due to the complex legal process, many of these efforts have been slowed down (McConnell et al., 2012). The most effective the laws and policies have been in preventing tying contracts and price fixing (McConnell et al., 2012). Not surprisingly, many monopolies in the United States enjoy a strong market position.
The current law in the U.S. treats monopoly as unfair or discriminating, only if it occupies more than two-thirds of the market and uses unacceptable practices and behaviors to achieve its dominant position (McConnell et al., 2012). In the past years, U.S. courts have become much more tolerant to businesses' aggressive behaviors in the market (Fox, 1997). Therefore, businesses are allowed to use practices and make steps that exclude their potential and real competitors from the market, without fearing that their behaviors will be interpreted as predatory. Only in case of predatory pricing, tying contracts with penalty clauses for switching to a different supplier, direct injures to competitors, and acquisition of a direct rival, U.S. law can limit businesses' practices and decisions (Fox, 1997). In the age of information and knowledge technologies, these problems become even more complicated.
In 1998, a federal lawsuit was filed against Microsoft for violating the fundamental provisions of the Sherman Antitrust Act. The government decided that Microsoft had acted illegally and inappropriately, trying to sustain its monopoly over the operational systems market (McConnell et al., 2012). The case became a turning point in the evolution of the new economy, which has three distinct characteristics. First, computer software manufacturing is one of the central elements of a robust economy (Posner, 2000). Second, Internet-based businesses continue to emerge (Posner, 2000). Third, communications services and equipment providers support both the development of computer software and the growth of Internet-based businesses (Posner, 2000). On the one hand, the new economy is focused on producing and delivering intellectual content, whereas all principal antitrust laws and competition regulations have been designed to support traditional industries. On the other hand, the knowledge economy is too innovative and fast to allow businesses using their legal advantage in courts: the legal process is simply too slow to satisfy the competitive needs of the new-economy businesses (Posner, 2000). All these difficulties impede the successful implementation of antitrust laws in the U.S. and call for the development of new legal frameworks that will guarantee fair and competitive business practices in all sectors of the national economy.
In conclusion, the United States has developed a whole set of laws to ensure the fairness and competitiveness of business practices. Since the Sherman Act of 1890 and until present, fair competition remains one of the top legal and social priorities in the U.S. However, all these laws have been only partially effective. The system of enforcement and litigation is quite complex. Numerous agencies are responsible for enforcing antitrust policies with diverse goals and priorities. The rise of the knowledge-based economy challenges established beliefs about competition. All these problems call for the need to develop new legal frameworks that will create an atmosphere of fairness and equal business opportunities in all sectors of the national economy.
Fox, E.M. (1997). US and EU competition law: A comparison. Institute for International
Economics. Retrieved from http://www.iie.com/publications/chapters_preview/56/10ie1664.pdf.
McConnell, C., Brue, S. & Flynn, S. (2012). Macroeconomics. McGraw-Hill/Irwin.
Posner, R. (2000). Antitrust in the new economy. Silicon Flatirons Center. Retrieved from