Free US Antitrust Policy Essay Sample
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The U.S. antitrust policy laws have been employed in diverse business organizations with the aim of expanding output and lowering prices charged on consumers. As the enactors of the policy claimed, the policy was meant to prohibit business activity from any form of practice that violated consumer rights as well as ethical conduct in business environment. There have been raised various concerns about the impacts that the antitrust policy in the U.S. As a matter of fact, it has been argued that the policy has not been effective in delivering the desired results (Harry, 2010). However, before embarking on the impacts that the U.S. Antitrust policy has led to, it is imperative to delve into the major issues that are solely addressed by the policy.
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The U.S. Antitrust Policy
The U.S. antitrust policy specifically addresses the extent to which businesses are allowed to act as they pursue the desire to control a large market. In a summary of the issues addressed in the U.S. antitrust policy there are several laws that form its basis. To start with, the policy dictates on the nature and extent of competition and monopoly (Armentano, 1986). As experts would have it, the manner in which competition is carried out and the modalities of its operation is based on open market process involving discovery as well as adjustment to prevailing conditions. For monopoly, there is legal as well as constraints on the third party as to how rivals will behave or how cooperation is carried out. Thus the antitrust policy is very particular about competition and monopoly formation. Thus no form of collusion, merger or acquisition was allowed. It ensured that adverse competition was shunned and that monopoly formation was curtailed at all cost.
Secondly, the antitrust policy was very mainly concerned with the operations of firms that were high-cost besides being inefficient. The laws aimed at sheltering these firms from the competitors who were much smarter and creative. As such, they wanted to ensure that such firms were not driven out the market through competitive strategies from other better performing firms (Berki, 2007). A third scenario of the antitrust policy is in the control of price rivalry. For instance, in the second section of the Crayton Act of 1914, as well as the Robinson-Patman Act of 1936, it is evident that price rivalry is highly restricted so as competition can be preserved. A forth issue addressed by the antitrust policy concern the all form of mergers that may have the effect of lessened competition. The policy has very restrictive measures on mergers and takeovers. For instance, anti-competitive effect can be seen in the seventh section through the cases on vertical-integration. In spite of the relaxed laws on mergers and acquisitions, we have seen the Antitrust Division of the department of Justice hamper any major business consolidation especially in the beer and steel industries. Even through there have been successful mergers and acquisitions, they have not been without struggles as well as specified conditions on divestiture-of-asset.
A fifth issue addressed in the antitrust laws concerns the government regulation towards on the economy. Cohorts of the policy will argue that this form of government regulation is meant to enhance economic efficiency. However, there is so much left to be desired on the impact of these regulations on economic efficiency. Through this government regulation, it is not possible for firms to lower prices as this will have the impacts of compromising on competition. Similarly, if firms innovate new process or products, it is imperative that they first consider the impact on competition to avoid being termed predatory. The sixth assumption of the antitrust policy regards the extent of awareness of the courts as well as the regulators on all information regarding social costs, social benefits as well as efficiency. Thus due to the extent of knowledge of these stakeholders, the firms should solely depend on them and only do what they deem right. Finally, the antitrust policy and laws have the power to violate notions of traditional law process. It is no wonder that they can interfere with rights of property as well as trustee owners in making of agreements.
The current antitrust policy does not seem fair at all. It seems to be too strict for the firms to effectively compete. It is paradoxical for the government to take such measures in the name of preserving competition to the extent that the firms within the U.S. cannot compete effectively with those around the globe and whose governments do have such regulations. Mergers and acquisitions, collusions, tying and bundling are some of the tools than can make firms grow competitively if only they are applied in a positive manner. Tying agreements can be very helpful for firms to shield themselves against all forms of negative competition that rivals may apply in order to drive them out the market. Similarly, bundling is useful as it can promote a firm's profit margin (Hovenkamp, 2004). This is because bundling contains various characteristics of predatory pricing. Predatory pricing is only condemned in instances where the firm dominating the market sets its prices far below any measure of cost. As a matter of fact, it can have positive impacts on a firm where the prices of the dominant firm remain above production costs. Thus it is not always have negative impacts. Similarly, a market power can be created if firms collude to form a high concentration in the market, production on economies of scale as well as product differentiation.
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The U.S. Antitrust policy does not completely demonstrate fair intervention by the government. Government regulation is imperative and acceptable if an economy has to remain sound. Nevertheless, the extent of government intervention should be in such a manner that it does render the economy nonfunctional and motionless. Antitrust laws should only apply in prevention ethical violations and should not hinder firms' growth and competitive level.