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What is Antitrust and Why Should You Care?

By Mark S. Putnam

Antitrust may seem like one of those academic business ethics topics that should be left to the lawyers. You may have heard about Microsoft or AT&T antirust lawsuits in the news, but you don’t know if there is any kind of real-life connection to your work. Why should a sales rep, middle manager, engineer care? The reason is simple; antitrust laws not only regulate the grand policies of large corporations but they also govern some of the day-to-day behaviors and conversations you have in the course of your job. In fact, it only takes a few wayward employees to bring a large corporation to its knees. Even a seemingly “insignificant” employee can get his or her company into serious antitrust trouble if the wrong things are said to the wrong people.

So, what are antitrust laws? First, understand that in a freely competitive market, each business attracts customers by providing the best product at the best price. This is how things should work. When companies engage in unfair business practices or monopolize a market, they throw this system out of balance. Antitrust laws are designed to protect competition and protect free trade. Imagine what would happen if you had to buy your computer from only one company or your groceries from only one store? Without competition, that business could charge whatever it wanted and you would have little power to change to situation.

This is what happened in the United States in the 1800’s. A few companies and individuals monopolized much of the tobacco, railroad, and steel industries. These monopolies were called trusts (or now commonly known as cartels). As a result, antitrust laws such as the Sherman Antitrust Act were passed along with later laws such as the Clayton Act and the creation of the Federal Trade Commission. These antitrust laws allowed for both civil and criminal penalties to be brought against abusers. Today, most western countries have antitrust laws of some form, including the European Union.

Basically, antitrust laws prohibit price-fixing, allocating territories, boycotts, or any other kind of conspiratorial or monopolistic behavior between companies that unfairly restrain free trade. These violations don’t have to be formal agreements between high-level executives, but can include the behavior of single individuals.

One of the most important areas of antitrust laws involves price-fixing. This is any kind of agreement between competitors about the price of a product (also referred to as “bid-rigging”). Any such agreement is a serious antitrust violation. As a rule of thumb you should never discuss prices, even in general ball-park terms, with competitors. This is especially important at trade association events or conferences where a lot of individuals from the same industries are present in the same location.

Other antitrust areas include allocating territories or customers and boycotts. You can’t divide up territories with a competitor or agree to sell only to certain individuals. This is fundamentally unfair and illegal. You should never hear someone say, “According to our agreement with so-and-so (the seller’s competitor), we can’t sell to you.” Likewise, you cannot agree with a competitor or other company to boycott a third party no matter how justified you feel the boycott is. It is one thing to personally boycott something based on your own moral disagreement, but it an entirely different thing when businesses agree to shut out another company with any kind of boycott.

As an employee, there are some important things that you can do to protect your company. First, watch what you say and to whom you say it. Do not communicate with competitors on sensitive competitive topics. Any kind of discussion about money, customers, or plans could get you into serious trouble. Second, be careful how you speak and write in memos, studies, reports, email, and voice mail. These communications can be saved indefinitely and a poorly worded message may come back to haunt you. Third, antitrust is a complicated legal area and you shouldn’t be shy about asking for professional help from your company’s legal department.

Unfortunately, antitrust is one of those areas that you may not think too much about until you find yourself a stranded consumer with no choices left on the shelf. Fair competition is vital to a free, functioning society. As an employee, you have a responsibility to keep our economic system fair by understanding and obeying the laws and to report wrongdoing when you see it. It’s not only up to the lawyers and big shots, it’s up to you.

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