Antitrust Case Study

Antitrust Case Study

Answer 1

Antitrust law which is implemented in the United States is a combination of state and federal government laws.

The main purpose of these laws is to regulate and monitor the behavior of different firms, in order to make sure competition is promoted and so that consumers can gain by the benefits of competition (Hovenkamp. H, 1986)

The main acts that are implemented in America include the Clayton Act 1914 and the Sherman Act 1890 and the Trade commission act of 1914 (Law.cornell.edu, 2013).

According to these acts, firms are prohibited to form cartels or practice any other collusive behavior which may act as a barrier of trade.

According to these legislations, merger and acquisitions of firms are prohibited if they act as a barrier to competition.

According to these laws, the creation of monopolies is prohibited along with other abusive monopoly behavior.

On April 2012, Department of Justice (DOJ) of the United States alleged Apple Inc and various publishers of violating the Sherman Act (Rash, 2013).

Puerto Rico and 15 different states filled a federal companion case against Apple, Penguin, Simon & Schuster and Macmillan in Austin.

The suit was filled in the Southern District of New York

The defendants were alleged to plot to fix the retail price as they saw Amazon's discounted price as a possible threat.

According to the complaint filed, Apple was alleged of facilitating the publishers and by coordination brought an end to competition in the business of retailing related to the sales of e-books.

By colluding the publishers set prices so that sellers had a homogenous price and they had no influence on the price

In April only, HarperCollins, Hachette and Simon & Schuster settled with DOJ and the state attorney generals.

Hachette and HarperCollins agreed to pay US$ 52m in consumer reimbursement to Texas and Connecticut.

Later on Penguin and Macmillan also surrendered (Owen, 2013).

Remaining defendant is Apple.

On July 10, 2013, Denise Cote, the judge of district court found Apple guilty.

According to the judge, Apple violated the federal antitrust law by playing an integral role in eliminating retail competition in the sale of e-books.

Answer 2

The main role of the antitrust laws that are practiced in United States include that of preventing companies from forming cartels and actively or passively practicing collusive behavior. According to the legislation laid down by law, each business has the job of independently and solely acting towards the betterment of the market, and as a result, solely earns profits with the use of effective pricing policies and good quality goods. The Sherman Act prohibits companies to get involved into collusive behavior or any conspiracy, which may lead to the act of restraining trade and competition. In other words this act prohibits two or more individual firms to act as a single unit in order to harm a third party. The decisions made by a single entity, are not captured in this Act, even though it is possible that two or more than two entities ...