Businesses are established to deliver products and services to consumers, and more often than not, this is done in pursuit of profit. However, business must be conducted in a manner that promotes fair competition, innovation and quality delivery.
While most businesses adhere to fair business practices, some engage in anticompetitive practices that harm consumers and other businesses. These violations can fall under antitrust laws, which are enforced by agencies like the Federal Trade Commission (FTC) to promote healthy competition in the marketplace. Anticompetitive business practices include:
1. Price fixing
When businesses collaborate to set prices at a certain level, rather than allowing competition to determine market prices, it leads to artificial price inflation. This practice undermines the free market by preventing consumers from benefiting from competitive pricing and can lead to increased costs for products. Price fixing is considered a serious violation of antitrust laws and is prohibited by the FTC and other regulatory bodies.
2. Exclusionary exclusive dealing contracts
When market players create exclusive dealing contracts designed to shut out competitors from accessing key markets or resources, it limits consumer choice and harms competition. These contracts force suppliers or customers to work with one business, blocking others from participating in the market. This practice can prevent new businesses from entering the market or growing and is considered a violation of antitrust laws.
3. Group boycotts
Refusal by market players to do business with certain companies or suppliers as part of a coordinated effort to drive them out of the market is known as a group boycott. This practice prevents fair competition by limiting the options available to consumers and other businesses. Group boycotts can harm smaller businesses by blocking their access to essential services or markets, and they are considered illegal under antitrust laws.
Legal action through business litigation can address antitrust violations, seeking remedies like damages or injunctions to restore fair competition.