Antitrust


Antitrust laws prohibit people and companies from improperly interfering with the functioning of competitive (think capitalistic) markets.

This is a broad and vague definition. Unfortunately, there is no clearer definition. I find it helpful to provide some examples of typical antitrust conduct or violations:

  • Price-fixing, whether by written contract or simply a conversation.
  • Non-poach agreements—where competitors agree not to hire each other’s employees.
  • Monopolies. Sometimes this happens simply from growing naturally, and sometimes this happens based on buying a competitor (an “acquisition”). Yes, you can be so big you fail!

It is important to understand that not all such agreements or “conspiracies,” as they are often called, amount to antitrust violations. The agreement or monopoly must be “unreasonable.” Some types of agreements are automatically unreasonable, no matter how you dice it. But other types of agreements may be either unreasonable or reasonable based on the facts and circumstances (and the quality of your attorney arguing one way or the other).

For instance, an agreement to fix prices between direct competitors will almost always be unreasonable. But a business, in some situations, may be able to legally establish fixed prices with a distributor. (The courts label the first, unreasonable type, as “horizontal” agreements; they call the second, sometimes reasonable type, as “vertical” agreements.)

Both the government and private parties can sue for antitrust violations. The penalties, fines, and fees can be staggering—these lawsuits are almost always high-stakes.And there are often criminal charges along with your standard financial risk. Given these business-ending, life-changing stakes, it is critical to hire an attorney who knows the legal nuances between reasonable and unreasonable; what is reasonable to a company may be unreasonable according to the law, courts, and competitors.

I will parachute into an antitrust situation at a moment’s notice, but because it is my goal to protect my clients as much as possible, I advise clients to contact me before they take action that may be an antitrust violation; an ounce of prevention is worth a pound of cure.

Read more about antitrust.

R. J. Cronkhite

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