Fighting Price Fixing and Unfair Market Practices

• ANTITRUST LAW OVERVIEW

  The United States maintains a capitalist driven economy. It is the American Way. American businesses depend on a free and open market. American businesses rely on the basic principals of fairness and open competition. When companies and industries fairly and freely compete – better products and better choices result and profits of the best companies improve.

  All 50 states and our federal government have laws that prohibit anti-competitive or monopolistic business practices. These laws are generally known as antitrust laws. Antitrust price fixing laws prohibit one company with a major share of the market from keeping out competition and also prohibits more than one major player from combining resources or conspiring to keep out competition or to otherwise fix prices.

  Most states also have laws prohibiting unfair and deceptive acts and practices. When prosecuting bad businesses for antitrust price fixing violations, Bonsignore Trial Lawyers also rely on laws prohibiting unfair and deceptive acts and practices.

  Most corporations compete fairly; trusting that the quality of their products and innovations they bring to the market will win consumer support. When big business is unwilling to let the market decide their sales and engage in anti-competitive acts and practices, antitrust price fixing becomes a significant concern. When businesses unfairly compete, Bonsignore Trial Lawyers step in, obtain restitution, and level the playing field.

• COMPETITION AND ANTITRUST PRINCIPLES

  The United States’ economy is premised upon the existence of competition between commercial entities. Anti-competitive conduct creates hidden costs to consumers by artificially driving up prices. To insure that competition is protected and anti-competitive behavior is punished, state and federal antitrust laws have been enacted.

  Antitrust price fixing laws were first put in place in the United States in the late 19th and early 20th centuries to deal with the problem of “trusts.” At that time, “unified management” enabled companies to unfairly exercise complete control over the market for particular products – from manufacture to distribution to sale and ultimate purchase by the consumer. Competitors were unfairly driven out of the market, and prices increased in the absence of competition. The unfair use of market dominance caused great economic losses for businesses and end-use consumers and contributed to the near collapse of the United States’ economy.

  To eliminate these abuses, antitrust price fixing laws were enacted. These laws are designed to reimburse consumers for unlawful overcharges and deter unlawful business practices that decrease competition. Antitrust price fixing laws encourage competition among companies and help ensure a competitive economy.

EXAMPLES OF ANTITRUST VIOLATIONS

• LOST PROFITS ARE CAUSED BY OVERCHARGES, UNDERCHARGES AND REFUSALS TO DEAL

  Anti-competitive conduct that results in consumer overcharges comes in many forms. Bonsignore Trial Lawyers will work to have antitrust price fixing violators reimburse consumers the value of the unlawful overcharges, regardless of the type of anti-competitive conduct at issue.

  Specific antitrust violations that eliminate fair competition include:

  • Price-fixing – agreements by competitors as to what prices to charge or that they will not sell below a certain price
  • Customer-allocation agreements – arrangements among competitors to allocate customers, such as by geographic area, to reduce or eliminate competition
  • Predatory-pricing
  • Monopolization
  • Monopoly leveraging
  • Tying arrangements
  • Vertical restraints
  • Exclusive dealing and refusals to deal in business transactions (may occur in a merger or acquisition, a joint venture, or privatization, for example)
• COMMON ANTI-COMPETITION INDICATORS

  Signs of anti-competitive behavior include, but are not limited to, the following:

  • Evidence that two or more competing sellers of similar products have agreed to price their products a certain way;
  • Evidence that two or more competing sellers of similar products have agreed to sell only a limited amount of their product;
  • Evidence that two or more competing sellers of similar products have agreed to sell only in certain areas;
  • Evidence that two or more competing sellers of similar products have agreed to sell only to certain customers;
  • Representations by a seller suggesting that only one firm can sell to a particular customer or type of customer;
  • Fewer competitors than are the norm submit bids on a contract;
  • Competitors submit identical bids;
  • For a certain product in a particular area, the same company repeatedly is the low bidder on contracts;
  • For a certain service in a particular area, the same company repeatedly is the low bidder on contracts;
  • Competitors appear to win bids on a fixed rotation;
  • Unusual and unexplainable significant differences in price between the winning bid and all other bids;
  • The same competitor bids substantially higher on certain similar bids than on others, and there is no logical cost-based reason that explains the difference;
  • Significant price changes that involve more than one seller of different brands of very similar products.

  While these signs are not conclusive evidence of antitrust price fixing violations, they are strong indicators of anti-competitive conduct and require action on your part.

• HORIZONTAL AND VERTICAL ANTITRUST VIOLATIONS

  Horizontal antitrust violations most often involve activities and agreements between competing manufacturers. Vertical antitrust violations most often involve activities and agreements between manufacturers and purchasers. The following outlines the basic business practices that violate antitrust laws:

  Horizontal Agreements Among Competitors

  Competing manufacturers can agree on standards for their products, how much they are going to manufacture and even how they are going to advertise. These agreements, however, cannot force competitors out of the market or wrongfully impact prices or competition. Improper agreements include:

  • Agreements on price
  • Agreements to restrict output
  • Boycotts
  • Market divisions
  • Restricted advertising
  • Codes of ethics
  • Restraints of other business practices

  Vertical Agreements Between Buyers And Sellers

  Many non-price related agreements between parties in a buyer/seller relationship have valid business justifications. Nevertheless, red flags are always raised where agreements are price-related.

  Improper agreements include:

  • Resale price maintenance agreements
  • Non-price agreements between manufacturer and dealer
  • Tie-in sales
• COMMON ANTITRUST VIOLATIONS

  The most common antitrust violations include bid rigging, price-fixing, unlawful, monopolization, and resale price maintenance.

  Bid Rigging: Bid rigging is when competitors enter into an agreement that ensures one party will win the bid for a contract. There are two types of illegal bid rigging: (1) competitors agree to bid at a certain price so that the other competitor will win, or (2) a contract is tailored so that a certain company will win a future bid.

  Price-Fixing: Price-fixing is a very common antitrust law violation. It occurs when competitors agree on the price they will charge for a product or service. The fact that competitors offer the same product or service at the same price does not mean that illegal price fixing is occurring. For example, one gasoline station may raise its prices in response to a price jump at the station across the street. Unless that jump was agreed upon by the two parties, no illegal conduct has occurred. Thus, it is the agreement to charge a certain price that is illegal.

  Monopolization: A “monopoly” exists when a large company has control over most, if not all, of a product or service in a particular industry or geographical area. “Monopolization” is the power exercised by that company. Monopoly is potentially dangerous because without competition, a company has complete control over the market price. Not all monopolies are unlawful. Some are economically efficient and do not harm consumers. For example, a company that builds a unique product that dominates a market because it is better, and not because the company took any illegal steps to become a monopoly, is legal. However, when companies take steps to obtain or maintain a monopoly, it may be illegal.

  Resale Price Maintenance: Resale price maintenance describes an arrangement in which a manufacturer requires a store to sell its product at a specific price. The manufacturer may bar the store from selling the product if it does so at a lower price. Although such arrangements used to be illegal automatically, recent United States Supreme Court decisions establish a case-by-case review of each arrangement.

• THE LAW

  Competition law promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies for the benefit of consumers. Competition law has its roots in the Roman Empire. Market traders, guilds and governments have always been scrutinized, and even severe sanctions imposed, for anti-competitive behavior. The move to enact competition laws began globally in the 20th century. The most extensive regulation systems exist in the United States and the European Union. There are also many other competition authorities across the world that have formed international support and enforcement networks. Antitrust laws prohibit one company with a major share of the market from keeping out competition. They also prohibit major players from combining resources or conspiring to keep out competition or to otherwise fix prices.

  International competition is governed and protected by international agreements. In 1945, during the negotiations preceding the adoption of the General Agreement on Tariffs and Trade (“GATT”), limited international competition obligations were proposed within the Charter for an International Trade Organization. These obligations were not included in GATT, but in 1994, the World Trade Organization was created and adopted an agreement addressing various cross-border competition issues in specific industries.

  United States antitrust law is comprised of federal and state government laws that regulate the conduct and organization of business corporations to promote fair competition for the benefit of consumers. The main statutes are the Sherman Act of 1890, the Clayton Act, and the Federal Trade Commission Act of 1914. These acts restrict or prohibit three primary practices: (1) the formation of cartels and other collusive practices regarded as being in restraint of trade; (2) acquisitions of organizations that could substantially lessen competition; and (3) the creation of a monopoly and the abuse of monopoly power.

  Private parties who are sufficiently affected and governmental entities, such as the Federal Trade Commission, the United States Department of Justice, and state governments, may all bring court actions to enforce the antitrust price fixing laws.

• PRIVATE SUITS

  Companies or entities that suffer economic loss as a result of violations of state or federal antitrust laws may bring a private action to recoup their economic losses and prevent further unfair competition. The United States Supreme Court summarized why Congress authorized private antitrust lawsuits in Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 262 (1972). There are various forms of relief available to consumers for losses caused by antitrust price fixing law violations. Courts may order both monetary and injunctive relief, including penalties. An award of money damages may be trebled, or tripled, under the Sherman Act to encourage private litigation to enforce the laws and to deter wrongful behavior. As an example, if a company is sued for price fixing and the jury determines that consumers were overcharged $300,000 as a result, the damages awarded to the consumers will automatically be tripled to $900,000. In Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251 (1946), the United States Supreme Court stated that treble damages awarded under the Clayton Act §4 need not be mathematically precise, but may be based on a reasonable estimate of loss that is not speculative. Any penalties awarded will be based upon the size of the company or the business. A court may also break up businesses into competing parts under different owners, although this remedy has rarely been exercised.

  Most corporations compete fairly, trusting that the quality of their products and innovations they bring to the market will win consumer support. When big business is unwilling to let the market decide their sales and engage in anti-competitive acts and practices, we are prepared and to take steps to level the playing field and obtain restitution for consumers and business competitors.

  The Bonsignore Trial Lawyers are committed to prosecuting antitrust price fixing cases for clients to ensure that markets remain competitive so that businesses and ultimately consumers can purchase the best possible goods and services at the lowest competitive prices. Our attorneys have extensive backgrounds in law, economics, and complex litigation necessary to help consumers and businesses injured by violations of antitrust law.

  If you believe that you are a victim of unfair practices of anti-competitive behavior, or if you want more information about an antitrust price fixing case, please contact us for a free evaluation of your case.