ANTITRUST LAW

I.     GENERAL CONCEPTS.

A trust is a corporation or conglomerate having monopolistic power within its field of commerce. Various laws have been passed to prevent such combinations from using unfair methods of competition. The federal antitrust laws are the Sherman Act, the Clayton Act, the Federal Trade Commission Act, the Robinson-Patman Act and many state statutes. The Sherman Act is concerned with agreements in restraint of trade and actual and attempted monopolization of markets. The Clayton and Federal Trade Commission Acts are concerned with anticompetitive exclusive dealing arrangements and mergers and with unfair methods of competition. The Robinson-Patman Act is concerned with discriminatory pricing and promotions in the distribution of goods.

II.     THE SHERMAN ACT.

        A.     HISTORY.

Through various conspiratorial and predatory practices, numerous monopolies had emerged in the United States by 1890 in such diverse industries as whiskey, petroleum, sugar, cotton, oil, and lead. They were called trusts because competing companies were typically combined in restraint of trade by transferring controlling stock interests in them to a board of trustees for integrated noncompetitive operation. Soon the "holding company" corporation replaced the trust as the device used. break up these monopolies, combinations, and conspiracies, Congress passed the Sherman Act. Under Section 1 of that act, "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is declared to be illegal. . .."

        B.     "UNREASONABLE" RESTRAINTS ON TRADE.

                1.     Price Fixing.

A seller may not agree horizontally with his competitors on the price at which they will sell, or vertically with his customers on their resale prices; whether or not the participants have power to control the market price, or such prices are "reasonable" or yield only a "reasonable profit," or are minimums designed to preserve a product's quality image, or are maximums intended to insure competitive resale price levels or to prevent overcharging.

                2.     Production Limitations.

Agreements of suppliers to limit their production affect fundamental supply and demand relationships and are automatically outlawed.

                3.     Market Division.

Suppliers are not allowed to divide the market even if necessary to avoid "ruinous competition" among themselves or to compete with the larger national chain stores.

                4.     Tying Arrangements.

Tying arrangements condition the sale of one product, the "tying" product, on the purchase of another, the "tied" product, from the same seller. For example, a manufacturer of a popular brand of snack food might decide to sell that product only to retailers who purchase a certain quota crackers from the manufacturer. The snacks would be the "tying" product, the crackers the "'tied" product. The tying arrangement would permit the manufacturer to boost sales of crackers even though his competitors might offer a better product. Such arrangements are bad per se "whenever a party has sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product."

        C.     REASONABLE RESTRAINTS OF TRADE.

Outside of these per se categories the rule of reason will support restraints of trade that serve legitimate business goals and are not seriously anticompetitive. Covenants, reasonable in time and space, forbidding the seller of a business from competing with the buyer, and covenants granting exclusive franchises within a shopping center, are two examples of reasonable restraints.

        D.     CONSPIRACY OR COMBINATION.

So little is needed to support a finding of agreement or conspiracy that competitors should not discuss subjects on which they could not legally agree, for example, setting prices or refusing to deal with third parties, for such a discussion followed by parallel action will support a finding of commitment to a common plan.

        E.     MONOPOLIZATION.

Section 2 of the Sherman Act makes it unlawful to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of" the interstate or foreign commerce of the United States.

III.     CLAYTON ACT.

        A.     HISTORY.

The Clayton Act was passed in 1914 during President Wilson's first term. The statute reflected the general sentiment that the Sherman Act standing alone was inadequate to guarantee free competition, partly because the Sherman Act dealt with accomplished restraints,, as distinguished from incipient abuses. Consequently, among other things, tile Clayton Act forbids exclusive dealing and certain mergers where the effect may substantially lessen competition or tend to create a monopoly. The Federal Trade Commission may halt incipient restraints through its power to forbid unfair methods of competition in interstate commerce.

        B.     EXCLUSIVE DEALING.

Section 3 of tile Clayton Act forbids any interstate supplier from selling commodities on the condition that the buyer will not use or deal in the goods of a firm competing with the seller. This law applies to ann. case where the exclusive dealing may substantially lessen competition in a line of commerce.

        C.     MERGERS.

Section 7 of the Clayton Act forbids the acquisition of all or any part of the stock: or assets of a corporation doing interstate business anywhere in any line of commerce in any section of the country. Ole effect of' such acquisition may be substantially to lessen competition or, tend to create a monopoly." The statute regulates mergers between competing corporations ("Horizontal"), between corporations in a supplier-customer relationship ("vertical"), and all other mergers ("conglomerate") where probable anticompetitive effects are shown.

IV.     ROBINSON-PATMAN ACT.

As amended in 1936 by the Robinson-Patman Act, Section 2 of the Clayton Act broadens the law to prohibit price discrimination that gives unfair advantage either to the seller, as in the case of a chain store lowering prices in one part of the country to destroy competition there, or to the buyer, as in the case of a chain store demanding price reductions from its supplier, or to the customers of the seller.

V.     OREGON ANTITRUST STATUTE:
SEE TRADE REGULATION AND COMPETITION STATUTES, OREGON UNFAIR TRADE PRACTICES ACT, ORS 646.505, ET SEQ.