Anti Trust and Competition Laws

Antitrust or competition laws, legislate against trade practices that undermine competitiveness or are considered to be unfair. The term antitrust derives from the U.S. law that was originally formulated to combat business trusts - now commonly known as cartels. Most antitrust activity can be classified in the following areas: bid rigging, the competitive bidding process, in which several suppliers or contractors are vying for contracts in what can be a very cutthroat environment, can be tailor-made for bribery; Monopolization, is defined as a persistent market situation where there is only one provider of a kind of product or service; oligopolization, is a market form in which a market is dominated by a small number of sellers (oligopolists.); price fixing, Any agreement between business competitors regarding price is considered price fixing and is illegal in many countries; tying, is the anti-competitive practice of requiring de facto or de jure the customer to purchase a certain package of goods together; vendor and lock-in business competition is a situation in which a customer is dependent on a vendor for products and services and cannot move to another vendor without substantial switching costs, real and/or perceived. www.reference.com

In the article, “UPM Won't Be Charged With Antitrust Activities In U.S.” the company was being accused of possible price fixing on magazine paper, which obviously is considered to be an antitrust activity. Methods of price fixing can include:

• Agreements to adhere to a price book.

• Agreements to engage in cooperative price advertising.

• Agreements to standardize credit terms offered to purchasers.

• Agreements to use uniform trade-in allowances.

• Agreements to limit discounts.

• Agreements to discontinue free service or to fix any other element of prices.

• Agreements to adhere to previously announced prices and terms of sale.

• Agreements establishing uniform costs and markups.

• Agreements imposing mandatory surcharges.

• Agreements to reduce output or sales.

• Agreements to share markets, territories, or customers.

While the article did not state which type of price fixing the company was accused of it had to be one of the above.

I believe the company got away from charges because the American law is very specific that price fixing is only illegal if it happens via communication and specific agreement between firms. It is not illegal for firms to copy the price moves of a de facto market leader as is the case with prices of cereals and cigarettes. Critics say that this rule makes the government not able to stop the majority of price fixing which harms consumers. So while the price