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Anti-Trust Basic Concepts

Gregory J. Kerwin, Taggart Hansen, M. Sean Royall, Strategic Risk Management For Natural Resources Companies and Their Advisors: Domestic and International Issues

As recognized by the Supreme Court, the purpose of antitrust laws, like the Sherman Act, “is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself. It does so not out of solicitude for private concerns but out of concern for the public interest.”1 Thus, fierce competition; efficient, innovative, and low-cost competitors; multiple product options and consumer choices; efficiency-enhancing collaborations and mergers; and expanded output with corresponding lower prices, are all treated favorably by the antitrust laws. In contrast, coordination between competitors (without justification); market dominance (achieved or maintained through “exclusionary” conduct); significant market consolidation (without corresponding efficiency); and restricted output with corresponding higher prices (due to artificial restraints, not natural market forces), are viewed as harmful to consumers because they [16A-2] stifle competition. To address this latter type of conduct, Congress has passed several laws -- the Sherman Act, the Clayton Act, the Federal Trade Commission Act, and the Robinson-Patman Act -- which are meant to police the market place by providing the government and priva