A recent example of antitrust case involved Microsoft Corporation. Microsoft contravened the Sherman’s laws by acting as a monopoly and acting abusively in the market (Rubini, 2010). Monopoly situation arose because the company wanted to establish itself as the sole browser maker by incorporating it into its operating system (McEachen, 2012). The costs associated with such behavior in the competitive market are many. For instance, it can lead to overblown prices as consumers are forced to pay more for products and services. Antitrust behavior affects the common consumer and unless legal action is taken, the consumer suffers.
The Federal Government usually implements the antitrust laws. The laws seek to protect consumers from companies that tend to become monopolies and abuse the market. These laws include the Sherman Antitrust Act, which prevents the formation of a monopoly (Lowitt, 2013). If a company decides to operate in a monopolistic manner, the Act seeks to remove it from the market. In case there are any antitrust laws, the government takes charge through the office of the U.S or through the respective Attorney in the States. In this case, the United States Government and the 19 States filed a suit against Microsoft for operating as a monopoly.
The Sherman Act forms the basis of modern-day Anti-trust legislations whose mandate is to protect consumers from wayward corporate practices that aim to exploit them (Lowitt, 2013). In essence, the Act tries to promote integrity in the market and for companies to operate in a competitive environment. Monopolies together with their subsidiaries or acquired companies can lead to great developments though the only downside is their control on the market (Lowitt, 2013).
Unless monopolies prove a threat to national security, they can be embraced for the provision of certain products and services (McEachern, 2012). Monopolization has a downside, since it is the sole supplier of certain goods and can decide to produce substandard and low quality goods (McEachern, 2012). Monopolies create barriers to entry in the market due to large economies of scale among other factors (McEachern, 2012). This reduces the marginal costs in producing additional units since the price is increased. Therefore, it is better to remove monopolies and promote competition, which will ensure good quality goods at affordable prices. This eliminates price fixing and the exploitation of end users (Lowitt, 2013).
Firms may collude to operate as one in distribution of products. This is possible where the companies are involved in a similar business operate producing related products. Collusions lead to the formation of oligopolies, which reduces competition in the market. The firms can be involved in the price fixing that disadvantages the buyer. If the large firms collude, they gain the market and result in imperfect competition between the large and small firms. The firms obtain market power and thus determine prices to the disadvantage of the smaller firms. An example of oligopoly is the internet where few firm control the internet. These are shaw, Telus, Bel and Rogers. Government monopolies are usually involving in distribution of products, which if left to the private sector would undergo exploitation. An example is the armed forces and the military (Lowitt, 2013).
Lowitt, E. (2013). The Collaboration Economy: how to meet business, social, and environmental needs and gain competitive advantage, New York: John Wiley and Sons.
McEachern, W. A. (2012). Economics: A contemporary introduction. Mason, OH: South-Western Cengage Learning.
Rubini, L. (2010). Microsoft on trial: Legal and economic analysis of a transatlantic antitrust case. Cheltenham, UK: Edward Elgar.
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