Everything You Need To Know About Antitrust Laws
09.19.2022 | Corporate Law
What Should I Know About Antitrust Laws?
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Antitrust Laws Have Many Sources
Antitrust laws can also be thought of as competition laws, designed to prevent market distortions. As a result of these laws, companies compete more fairly for profits and customers and customers pay fair prices.
California Antitrust Laws
California has two acts — the Cartwright Act and the Unfair Practices Act — that lay out the practices that California considers to be anti-competitive. Some examples of anti-competitive practices include:
- Price fixing
- Restricting trade or commerce
- Preventing competition in manufacturing, transportation, or the sale of goods
- Artificially limiting sales or inventory
- False advertising
California’s antitrust laws apply to all businesses operating in California, regardless of where the business is headquartered or incorporated.
U.S. Antitrust Laws
Federal antitrust laws arise from three acts of Congress:
- The Sherman Antitrust Act, which outlaws any combination or agreement that restrains commerce and trade.
- The Clayton Antitrust Act, which prohibits any merger or acquisition that lessens competition in an industry.
- The Federal Trade Commission Act, which prohibits unfair or deceptive trade practices, like false advertising.
These laws apply to every business that operates in interstate or international commerce. Almost every business advertises online, receives supplies from other states, and sells products and services to other states. This means that almost every business is subject to U.S. antitrust laws.
Antitrust Laws Include Criminal and Civil Penalties
California’s antitrust laws can be enforced through:
- A lawsuit by a competitor or customer who was harmed by anti-competitive practices
- A civil enforcement action brought by the California Attorney General on behalf of the state or a district attorney on behalf of a county
- A criminal action brought by the California Attorney General or a district attorney
A person, business, or group of businesses that are found to violate California antitrust law can face severe penalties. These penalties include damages, fines, disgorgement of excess profits, and an injunction that stops the anti-competitive practices.
Federal antitrust laws have many more avenues for enforcement, including:
- A competitor or customer can bring a civil lawsuit to enforce federal antitrust laws
- The U.S. Department of Justice (DOJ) can sue to prevent a merger or acquisition that will violate federal antitrust laws
- The U.S. DOJ can sue to stop ongoing practices that violate antitrust laws
- The U.S. DOJ can file a criminal complaint against businesses or individuals that violate federal antitrust laws
- The Federal Trade Commission can bring civil enforcement actions to end unfair or deceptive trade practices
Businesses and people that violate federal antitrust laws can face prison sentences, fines, civil penalties, and disgorgement orders. Most importantly, federal penalties can include injunctions to stop anti-competitive practices and break up monopolies.
Customers and Competitors Can Sue for Antitrust Violations
Under California state law and federal law, any person or business that is harmed by an anti-competitive practice can file a lawsuit for an antitrust violation.
In a lawsuit brought forth under California law, parties who successfully sue for an antitrust violation will recover their actual damages and receive an injunction that orders the business or person to cease the anti-competitive practices. But more importantly, the business or person who violated the antitrust laws must pay the plaintiff’s attorney fees.
Under federal law, the judgment can be even larger. Federal law allows a business or person who wins an antitrust case to recover treble damages, court costs, and attorney fees. This means that if an anti-competitive practice costs the customer $50,000 in overpayments, the customer could receive $150,000 in damages, plus all of the out-of-pocket expenses for bringing that lawsuit.
Understanding Antitrust Law
If your business is considering a relationship that might violate antitrust law or a competitor was injured by an anti-competitive practice, a firm that practices corporate law can advise you in California state and U.S. antitrust laws.
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