Back in the 1800s, the American economy was controlled by several large businesses commonly known as "trusts." These companies controlled every aspect of the economy; railroads, steel, oil, and sugar. Industrialist such as John D. Rockefeller and Andrew Carnegie who owned the oil and steel industries during the 1800s were monopolies and controlled both the supply of their products and prices without any governmental interference (Clark 20). As a result of monopoly, small businesses and individuals had limited choices of their buyers; they were forced to cope with the high prices and constant exploitation from the monopolized companies. The quality of products significantly reduced while their prices continuously rose throughout the period. This period was characterized by hardship and high living standards for the American Society as most people could not afford the various products due to their high cost. The economy was controlled by a few privileged individuals while most of the Americans were left to struggle.
The most prominent members of the society like Carnegie, Rockefeller, and Morgan, became richer and were able to control every aspect of the United States government including the presidential aspirant. Many American could not sustain such economic climate and demanded the government to take action in stabilizing the market and maintaining competition and fairness in prices. In response to citizen’s outcry, President Roosevelt broke up several monopolized industries (trusts) by creating the antitrust laws. The primary goal of these laws was to protect consumers from constant exploitation by promoting competition in the market.
The passing of the Sherman's act led to the destruction of many monopolized companies. As a result, companies sought to merge to fight competition in the market. Merging was an avenue where companies would control prices of various products and production. To counteract this trend, the Clayton Act was passed in 1914. The main aim of Clayton Act was to halt mergers that would otherwise prevent competition in the market. With the increase in the merging of various companies for selfish interest, this act was an effective method of counteracting such activities that would lead to customer exploitation. This law stabilized the market by limiting unfair competition that would result in unfair prices and poor quality of products.
A federal agency was created in 1914 with a mandate of actively investigating several businesses. Their objective is to identify business malpractices and stopping such business if found infringing the various business laws, among the areas investigated by this authority, include unfair methods of competition and deceptive practices used by different companies to lure their customers into buying their product.
Three bodies were created by the United States government to monitor the three antitrust acts. These agencies include the federal trade commission, bureau of competition and Department of Justice antitrust division (Muris 150. These three bodies work together to realize a free market that promotes competition and prevents customer's exploitation from high prices. Each agency has developed expertise in a given industries hence allocation of duties is easy. Various states in the United States have state antitrust laws that are enforced by the attorney general.
One of the main reasons for creating of the antitrust laws was to promote competition in the marketplace (Coase 29). Promotion of competition is crucial to any economy as it results in many advantages. Among the benefits realized as a result of fair competition in the market include; more innovation between competitive firms, better quality of products and level of productivity, lower prices and cost of goods, and wealth equality. These factors result in economic growth and development which is a significant milestone for every county. Prevention of business malpractices will protect customers from price exploitation and poor quality products.
One of the recent cases involving antitrust violation was between the United States and Microsoft Company (Baker 30). Microsoft was accused of violating section 2 of the Sherman Act by indulging in anticompetitive and predatory acts that aim at maintaining its monopoly in the market. Other claims include Microsoft attempt to monopolize its web browser and making exclusive deals to keep a monopoly in the market. Based on evidence and court findings, the court concluded that Microsoft used dubious means to maintain a monopoly on the market and its attempt to monopolize its web browser was illegal. Also, Microsoft had violated Section 1 of the Sherman's Act by unlawfully trying its web browser on its operating system. Microsoft marketing arrangement with other companies was not found as unlawful as it did not meet the criteria for violation of section 1 of the Sherman Act.
Work cited
Clark, Cynthia L. The American Economy: A Historical Encyclopedia, [2 volumes]: A Historical Encyclopedia. ABC-CLIO, 2011.
Baker, Jonathan B. "The case for an antitrust enforcement." The Journal of Economic Perspectives 17.4 (2003): 27-50.
Coase, Ronald Harry. The firm, the market, and the law. University of Chicago Press, 2012.
Muris, Timothy J. "Looking Forward: The Federal Trade Commission and the Future Development of US Competition Policy." George Mason Law & Economics Research Paper 04-21 (2002).
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