Antitrust Law



Antitrust Law

Question 1:

What are antitrust laws and what are the public policy considerations for such regulations. "Public policy considerations" are the broad societal considerations that would lead a legislature or a court to make a particular decision in the way it did.

Answer

Adhering to United States, state and international antitrust laws is a necessary concern for consortia and other standards developing organizations ("SDOs"). Antitrust risk is inherent in the very concept of a consortium or SDO. Because these organizations are almost always formed by competitive (or potentially competitive) business entities, the risk of improper collusion is never far away. The potential for a problem is made greater by the fact that the antitrust laws are general in nature (violation often being a matter of court interpretation), and therefore it may not be obvious to participants with innocent intent that they have "crossed the line" into areas of potential liability.

The courts are fond of describing the antitrust laws broadly, in almost constitutional terms. The courts state (to paraphrase) that the objective of the US antitrust laws is to preserve and promote competition and the free enterprise system. Of course this, by itself, tells almost nothing to someone seeking to learn how to comply with the laws. In fact, the only way to gain a useful understanding of the antitrust laws is to examine the cases where the courts, over the past century (and more) have determined on a case-by-case basis what conduct does or does not pass muster under these laws.

The problem that consortia are most likely to face is the appearance or reality of improper collusion. At their core, the courts interpret the antitrust laws to presume that competition (a good thing) is best encouraged if buyers and sellers (and in more recent times licensors and licensees) make business decisions independent of each other. If decisions are made by competitors working together, whether they agree on prices, divide and allocate markets, restrict product features, set conditions of sale, or arbitrarily agree who is "in" and who is "out" of a standards organization (all bad things), the purchasing public will be presumed to suffer in consequence. Its suffering will result from higher prices and fewer choices.

Interest in enforcing the federal antitrust laws (which is, by far, where most of the official action lies, since the states rarely have sufficient resources to prosecute cases of this nature) is so ...