United States Antitrust Law - Prohibited Anti-competitive Behavior

Prohibited Anti-competitive Behavior

A distinction between single-firm and multi-firm conduct is fundamental to the structure of U.S. antitrust law, which, as noted antitrust scholar Phillip Areeda has pointed out, "contains a 'basic distinction between concerted and independent action.'" Multi-firm conduct tends to be seen as more likely than single-firm conduct to have an unambiguously negative effect and "is judged more sternly." European competition law also includes a fundamental distinction between single-firm and multi-firm conduct, but a different analytical structure is applied. In U.S. antitrust law, the Sherman Act addresses single-firm conduct by providing a remedy against "very person who shall monopolize, or attempt to monopolize...any part of the trade or commerce among the several States." This prohibition does not condemn monopoly per se but only monopoly that has been acquired or maintained through prohibited conduct.

With regard to multi-firm conduct, the Sherman Act addresses this by prohibiting "very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." Conduct falls within the scope of this prohibition only if some form of agreement or concerted action can be proven.

In considering multi-firm conduct, another distinction is also fundamental: the distinction between conduct that is deemed anticompetitive per se and conduct that may be found to be anticompetitive after a reasoned analysis. There does not appear to be a precedent for per se condemnation of single-firm conduct. Monopoly power alone, without some act of wrongful exclusion or other legally cognizable anticompetitive conduct, is not prohibited. To the contrary, as the judge Learned Hand noted, "he successful competitor, having been urged to compete, must not be turned on when he wins." U.S. antitrust law thus does not attack monopoly power obtained through "superior skill, foresight and industry."

While the prohibition against multi-firm anticompetitive goes against agreements "in restraint of trade", it is not enough to show that an agreement in some technical way restrains trade. Under U.S. law, at least, the scope of the prohibition is limited to those agreements where the restraint of trade is unreasonable:

Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.

One such obviously anticompetitive conduct as overt price fixing, for example, is placed into this per se category of conduct so clearly detrimental to competition that detailed analysis is unnecessary. Otherwise, antitrust plaintiffs are required to demonstrate, by "the facts peculiar to the business to which the restraint is applied", the nature of the challenged conduct and why it is harmful to competition.

The following types of activity are often subject to antitrust scrutiny.

• Price fixing: An agreement between business competitors selling the same product or service regarding its pricing
• Bid rigging: A form of price fixing and market allocation that involves an agreement in which one party of a group of bidders will be designated to win the bid
• Geographic market allocation: An agreement between competitors not to compete within each other's geographic territories.
• Walker Process fraud: Illegal monopolization through the maintenance and enforcement of a patent obtained via fraud on the Patent Office (the term comes from the Supreme Court case Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965)).