Introduction
The first antitrust law was formed by the Congress in the year 1890. It was referred to as Sherman Act, and its aim was to ensure that there was economic liberty, by ensuring that the competition in the trade was fair. Later, the Congress passed other two antitrust laws in the year 1914, and these additional laws contained some revision to the first antitrust law. Those laws were the Clayton Law and the Federal Trade Commission Act. The court applies the antitrust law to prevent illegal business practices and unlawful mergers. The main objective of the antitrust law is to protect the consumer from the unfair competition practiced by the business people.
Overview of the antitrust laws
The Sherman Antitrust Act has the following two provisions. It outlaws every combination or contract in restraint of the trade. The second provision is that it outlaws every monopoly act or attempt to monopoly and conspiracy in any part of the trade. There is a difference in the two provision of the Sherman Act. The first provision requires the presence of two or more parties as it is not possible for an individual to have a contract alone. The second provision may apply to two or more parties or even to a single person.
The Clayton Act was mainly passed to strengthen the Federal antitrust laws. Its main aim was to cover some of the practices that the Sherman Act did not cover. It deals with those acts in the businesses that are considered illegal but not criminal. The major offenses in the Clayton Act are outlined in the following sections of the Act 2, 3, 7and 8. In section 2 of the Act, price discrimination is prohibited by the Clayton law. Price discrimination is the act of the seller charging different prices for identical goods to competing buyers. The section 3 of the Clayton law prohibits the seller or lessor to get involved in the exclusionary practices or agreements. Exclusionary practice is a situation where the seller or the lessor forbids the purchaser or the lessee from using the products of the competitors. In section 7, there is the prohibition of acquisition of “stock” or assets of one business by another with the aim of lessening the competition or with an aim of creating a monopoly. Section 8 of the Clayton Act prohibits an individual from serving as a director for two or more competing businesses.
Question 1
The main aim of the antitrust law is to protect the consumer from the effects of unfair competition. In the case study, there are some grounds in which the plaintiff can stand upon in his claim. According to Sherman Antitrust Act, it is a crime for parties to be involved in a contract with the aim of lessening the level of competition. In the case study, the act of the Madison-Dane County Tavern League had an impact. They decided to reduce the consumption of the drink specials on Friday and Saturday nights and this had an impact on the students. The impact of the act by the owners of the local tavern’s owners was that there would be a reduction in the availability of the product that the students used to obtain. The plaintiff can also sue for the violation of the antitrust law in section two of the Clayton Act because there is evidence of the price discrimination. The city encouraged the owners of the tavern not to reduce the prices of the special drinks so as to discourage the students from consuming it. The issue of price discrimination comes in, as the price offered to the students around the university is relatively higher than those of other places.
There is evidence of horizontal restraint of trade. The decision by the owners not to provide the special drinks on Friday and Saturday nights is also a violation of the antitrust law. The plaintiffs who were the students of the university did not accessed the special drinks when they required it as restrictions for the drinks were imposed by the city authority.
Question 2
There are some of the exemptions to the defendants. The antitrust law has exempted some of the practices by the sellers, especially where the business people are expecting an act from the government. In the case study, the owners of the taverns agreed not to sell the special drinks on Friday and Saturday nights. The reason for not selling during the nights was to avoid the act of the city of banning the special drinks. The defendants went forth to defend themselves by proving that the reduction of the drinks prices was to control the consumption of the drinks by the students.
The defendants defended themselves by bringing forward the fact that the regulation of the prices for the special drinks was not meant to interfere with the business competition. They were adhering to the act of the city authority to control the consumption of the drink by the students. Although there is an indication that the owners of the taverns “voluntarily” agreed to reduce the consumption during certain nights, this was not intended to create a monopoly. In the Sherman’s Act, it is evident that creation of a monopoly as a restraint to trade is a crime.
Question 3
The court will examine all the facts of this case so as to make the judgment. The fact that the city authority in the case study wanted to regulate the consumption rate of the university students who had started to misbehave, then the antitrust laws can be exempted. There are some cases where the antitrust laws are exempted. For example, in a case when one of the branches of the government wants to formulate or implement an action to control any activity in the country then the antitrust law can be exempted.
The fact that the Clayton Act abolishes the forms of price discrimination, there are some situations that are excempted by the court. When the sellers adjust their prices to meet the reality of the market, then the law of the antitrust will be exempted. In the case study, the reality was that the sellers were to adjust their prices higher or else the government would ban the consumption of the drink around the University. The sellers could have experienced a large loss if the government had banned the consumption of the drink around the University of Wisconsin. They ensured that they had reduced the consumption of the drink in some of the nights.
The court can also give the judgment by evaluating the main aim of the defendants, of coming up with an agreement to reduce the time of consumption of the drinks in some nights. The sellers did not want their commodity to be banned by the authority, and instead, they agreed to reduce its availability. The main objective of regulating the prices of the drinks and the time of drinking was to reduce the impact of the drink in university. In conclusion, the defendants were not liable under the Antitrust Law because the law exempted some acts and thus in the case study, there was no violation of the antitrust law.
References
America Antitrust Institute. (2013). SUMMARY OF SECTION 7 OF THE CLAYTON ACT
(1st ed.). Washington. D.C: National Press Club. Retrieved from http://www.antitrustinstitute.org/sites/default/files/Section%207.pdf
Ftc.gov. (2016). The Antitrust Laws | Federal Trade Commission. Ftc.gov. Retrieved 5 May
2016 from https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust- laws/antitrust-laws
Miller, R. L. R., & Hollowell, W. E. (2016). Business law: Text & exercises. Mason, Ohio:
South-Western Cengage Learning. Retrieved from https://books.google.co.ke/books?id=dbsaCgAAQBAJ&pg=PA258&dq=Business+law:+Text+%26+exercises+2011&hl=en&sa=X&redir_esc=y#v=onepage&q=Business%20law%3A%20Text%20%26%20exercises%202011&f=false
Miller, R. L. R., & Jentz, G. A. (2011). Business law today: Text & summarized cases: E-
commerce, legal, ethical, and global environment. Mason, Ohio: South-Western Cengage Learning. Retrieved from https://books.google.co.ke/books?id=B4BuLpk-ve4C&pg=PR3&dq=Business+law+today:+Text+and+summarized+cases+:+e-commerce,+legal,+ethical,+and+global+environment.&hl=en&sa=X&redir_esc=y#v=onepage&q=Business%20law%20today%3A%20Text%20and%20summarized%20cases%20%3A%20e-commerce%2C%20legal%2C%20ethical%2C%20and%20global%20environment.&f=false
