The Anti-Trust Act Discussion

The Anti-Trust Act Discussion

The anti-trust act illegalizes any attempt for businesses or players in commercial activities to conspire and fix prices outside the forces of demand and supply. Actions that seek to set prices outside active competition may lead to the monopolization of a sector (Pozgar, 2016). Such monopoly results from the fact that existing businesses may set prices too high or too low, two elements that may make it hard for new entrants to enter the market. Any agreement that seeks to monopolize any trade or commerce sector constitutes a felony. By setting a legal deterrent, businesses are encouraged to engage in actions aligning with free market conditions.

Price fixing is detrimental not only to competing businesses but also to consumers. For instance, multinational corporations operating in developing countries may charge consumers disproportionately high prices, thereby worsening their welfare. High prices may have negative impacts beyond monetary costs as they reduce the incentive to innovate (Pozgar, 2016). For instance, healthcare providers might be comfortable since they are assured of making revenue even if they do not improve their processes and operations. In the long run, consumers will have to cope with low quality or at least the status quo for a while before new entrants come in and disrupt the market.

Trade conspiracy agreements may also affect the supply chain, especially for multinational corporations.  Such businesses may engage in other underhand methods to drive prices upwards besides mere price setting. For instance, restricting the supply of products will automatically drive prices upwards as per the laws of demand and supply (Pozgar, 2016). A perfect example is when competing oil marketing companies agreed to stop the importation of oil lubricants to Puerto Rico as a protest against the requirement to pay an environmental pollution fee. By stopping the supply, these companies effectively led to an increase in lubricant prices.

References

Pozgar, G. D. (2016). Legal and ethical issues for health professionals (Fourth Edition). Jones & Bartlett Learning.

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According to the Federal Trade Commission, n.d., “the antitrust laws require that each company establish prices and other competitive terms on its own, without agreeing with a competitor. When purchasers make choices about what products and services to buy, they expect that the price has been determined based on supply and demand, not by an agreement among competitors.

” This offer is not about me and my personal interests, it is about having the integrity to do the right thing for the company’s sake/the fiduciary I work with. (Senken, 2019), An administrator must recognize situations where the sharing of competitively sensitive information may be an issue and anticipate the risks involved by implementing appropriate safeguards, which is of paramount importance.

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