September 14, 2017
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Economics

Antitrust policy is a policy effected to make companies act in a competitive manner by breaking up companies that are monopolies, prohibiting mergers that would increase market power, and finding and fining companies that collude to establish higher prices while Industrial regulation is government regulation of firms’ prices (or “rates”) within selected industries. Therefore antitrust policy is designed to promote competitions while industrial regulations are designed to control price or rates of commodity of a product. The government varies in choosing industrial regulation or antitrust policy due to different interpretation of the law. For instance different administration will hold different view on the effectiveness of the anti trust laws. Administrations holding a laissez-faire philosophy about monopoly have sometimes ignored them or have reduced the budgets of the enforcement agencies. Therefore the effectiveness of the anti trust law will solely depend with how the courts interprets them. The Sherman Act outlawed restraint of trade. It thus provide the legal frame work of breaking up monopoly and anticompetitive practices while Clayton Act was to It also sought to outlaw the techniques that firms might use to develop monopoly power and, in that sense, was a preventive measure. As provided in both Act The US Department of Justice the Federal Trade Commission or the aggrieved individual is entitled to institute a case against alleged violator of the law. In the case of Standard Oil The Supreme Court found Standard Oil Guilty of monopolizing the petroleum industry through abusive and uncompetitive actions. The court thus divided the company into several competing firms to compete among them. While in the Steel Case the Court held that Steel monopoly power was innocent because it hard not did not resort to illegal practices against competitors in obtaining that power nor had it unreasonably used its monopoly power unlike the standard oil. DuPont cellophane case of 1956 the Court defined the market very broadly. While Du Pont controlled 100 percent of the cellophane market its market included all “flexible packaging materials”—waxed paper, aluminum foil, which were not a monopoly of DuPont. As Standard Oil was divided into several firm to compete Microsoft was cautioned against it behavior to stop in engaging in a set of specific anticompetitive business practices. Different administration will hold different view on the effectiveness of the anti trust laws. Administrations holding a laissez-faire philosophy about monopoly have sometimes ignored them or have reduced the budgets of the enforcement agencies. Therefore the effectiveness of the antitrust law will solely depend with how the courts interpret them. Change of administration might affect an on going antitrust case according to their interpretation of the antitrust law. Therefore if the administration in power deemed it fit to follow the antitrust policy to the latter the case will continue and vice versa. However it is the prerogative of the court to see the case reaches to it final submission A proposed merger of Ford and General Motors will not be a monopoly since there will be other automobile firms to compete against. This will be unfair and illegal business practice which will result into antitrust case against the construction company. A merger of large shoe manufacturing company and a chain of retail shoes store will be unfair competition to other shoes manufacturers as they will not have outlets to sell their shoes thus will breach the antitrust laws. A merger of small insurance company and a candy manufacturing company will be a business partnership with no illegal business practice hence no breach of antitrust law. That will be breach industrial regulation policy on monopoly. Such a merger will be allowed provided the company does not involve in illegal business practices to block other companies from competition with them.

September 14, 2017
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