Antitrust Law
With their potential for multimillion dollar damage awards as well as their potential for restructuring entire industries (such as the telecommunications or petro-chemical industries), antitrust cases are complex high-stakes cases that often make front page news. Antitrust law was responsible for the breakup of the Standard Oil Company into numerous competitors as well as the split of AT&T from the Bell Operating Companies (e.g., Ameritech and Pacific Bell). Similarly, antitrust law was behind the U.S. government's actions against IBM in the 1970s and against Microsoft in the 1990s. Each of these complex cases had the potential, and often the result, of causing fundamental change in basic industries in the United States.
In many of the leading antitrust cases, the courts will state that the purpose of the antitrust laws is to protect competition, not competitors. Price reductions caused by competition in the marketplace, even if they result in economic loss to one or more competitors, are not necessarily a bad or illegal result. However, the antitrust laws prohibit price reductions that are designed to drive competitors out of business. In 1999, the Justice Department filed a suit against American Airlines, alleging that the airline engaged in predatory pricing-slashing prices and increasing the number of flights offered in order to drive out low-cost competitors from a common hub in Dallas-Ft. Worth. At a news conference following the filing of the suit, Attorney General Janet Reno asserted that the government was acting to protect consumers. "It's the public who loses out when major airlines succeed in driving out low-cost competitors," she said. The airline responded that it was simply engaging in healthy competition and doing nothing illegal or improper.
The antitrust laws are intended to prevent the development of business monopolies and to preserve and encourage competition. Two provisions-the Sherman Antitrust Act and the Clayton Act-form the basis of our antitrust laws. The Sherman Act prevents any unreasonable anticompetitive conduct, such as interference with competitive pricing and distribution or attempts to monopolize a market. The Clayton Act prohibits price discrimination, exclusive contracts, mergers, and interlocking directorates which substantially lessen competition or tend to create a monopoly.
Reproduced from The Official Guide to Legal Specialties with permission. (c) 2000 Thomson Reuters/West. For additional information on this publication please visit 
http://west.thomson.com/products/law-students. Copyright granted via e-mail by Donna Gies, September 16, 2008.