Antitrust 101

Federal Antitrust Laws

There are three important federal antitrust laws used by attorneys general.

The Sherman Antitrust Act of 1890. Section 1 prohibits combinations or conspiracies in restraint of trade, and section 2 prohibits monopolization. The majority of state antitrust laws are modeled after the Sherman Act.
The Clayton Antitrust Act of 1914. Section 7 prohibits anticompetitive mergers and acquisitions.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976. Section 4C gives attorneys general the authority to bring parens patriae (literally “father of the country”) actions. These are lawsuits for violations of the Sherman Act filed on behalf of natural persons, not corporations, who are citizens of the state.

Bid-Rigging occurs when independent competitors do not actually compete with each other when bidding on public contracts but, instead, agree to submit bids in a coordinated way that artificially allows a winning bidder to get a higher price. Different types of bid-rigging include bid suppression, complementary bidding, and bid rotation.
Horizontal Price-Fixing occurs when businesses that would usually compete with each other to sell the same product or service, instead, agree to set their prices together or agree not compete in certain areas or in certain product markets (for example, different hotel chains, car manufacturers, or shoe brands).
Vertical Price-Fixing occurs when businesses at different levels of the market (for example, manufacturers, wholesalers, and/or retailers) agree to set prices in a way that results in maximum profit and unfair pricing for consumers.
Monopolization occurs when a firm unreasonably restrains or blocks another competitor in order to maintain a monopoly. Having a monopoly is not illegal — maintaining it through anticompetitive actions is.
Anticompetitive Mergers are those where the effect “may be substantially to lessen competition, or to tend to create a monopoly.”

Attorneys general are able to pursue enforcement actions using both federal and state statutes. They can:

Civilly enforce antitrust statutes as state law enforcement officers.
Bring criminal actions for antitrust violations under state statutes.
Represent their natural citizens who have been harmed by an antitrust violation and recover damages for those citizens under federal antitrust law.
Represent the state (or a state entity) in its proprietary capacity (as a buyer of goods or services) if it has been harmed by antitrust violations.
Bring an action for damages to the general economy of the state, under some state statutes.
Challenge anticompetitive mergers that may hurt the state or its citizens, in the same capacity as a private party.