Even Small Companies Can Violate Antitrust Laws

Antitrust laws seem like laws that only large, multinational companies violate. But if you’re not careful, your business can run afoul of these laws as well.

Honest Business?

What makes antitrust laws so dangerous, and so easy for small businesses to violate, is that they seem like they are prohibiting what would otherwise sound like smart business, or open market competition. But antitrust laws are designed to protect competition, and there are things that businesses do when they are not careful that can end up getting the government’s attention.

You certainly can get ahead in the market and even put your competitors out of business, with good business decisions and by just being a better company or service. But there are times when strategies go beyond just good business, and start to enter into violating antitrust laws.

Collusion and Unfair Manipulation

One area where small businesses can get in trouble is by colluding. If you sell a product or service in a region, and you don’t have that much competition, it may be tempting to try to work with your competitors instead of competing against them. Why don’t all of you just agree to certain prices, or certain business strategies, ensuring that all of you make a profit?

That may sound cooperative and smart—but it may be illegal. That’s collusion, and is an antitrust violation.

Using Influence

You should avoid doing anything that squeezes out competition (other than being good at what you do or sell).

If you are the best, most wanted IT professional in town, telling customers you won’t help them if they ever do business with your competitors, creates an unfair business advantage. You are putting competitors out of business by wielding your corporate power and influence—not just by consumers selecting you because you are better. Generally, you should never condition the sale of your product or service on your customers not using one of your competitors services.

This, of course, in your relationship with end-line consumers, and actions that can affect prices on open markets. You are allowed to use normal exclusivity agreements in your dealings with other businesses, such as contractors that you may hire to perform services for you.

This is why companies like Apple allow competitors like Google, to put its apps in Apple’s app store—because Apple wouldn’t want it to look like it was using its market power and influence, to limit customer choice, or to manipulate the open marketplace.

Supply and Demand

Manipulating supply and demand can get you in trouble also. Working with competitors to ensure there isn’t too much of a given product or service available on the open market, so that you can keep prices higher is a classic antitrust violation.

A good question to ask is whether your success is based on your product or service or something that you are doing in your business, or whether it’s a product of coordination, manipulation, or agreement with what would ordinarily be competitors. The latter is almost never allowed, and will get you into trouble, even if you are a smaller company.

Antitrust violations can even in some cases, get you into criminal trouble—especially when your actions actually cause the cost of goods or services for consumers to increase.

Questions about what your business can and can’t legally do? Call our Fort Lauderdale business law lawyers at Sweeney Law P.A. at 954-440-3993 today.

Sources:

corporatefinanceinstitute.com/resources/knowledge/finance/antitrust-laws/

upcounsel.com/antitrust-laws-examples