Who enforces the antitrust laws?

Author- | Posted- | Updated: July 8, 2020 |

The Antitrust laws in the United States play a  very important role in ensuring free and fair competition. These laws save the consumers in the US nearly millions or even billions in overcharges. Free and open competition in the US market is beneficial for both the consumers and the society as well. The antitrust laws make it illegal for individuals and businesses to get involved in unfair and fraudulent business practices that are anti-competitive and can deprive the American consumers of the profits of fair competition. 

When two or more businesses get involved in anti-competitive practices through mutual agreements, it drives prices higher while product or service quality remains low. Competition drives higher innovation and when there are many businesses competing for customers, they try to attract them using lower prices which benefits the consumers. While many consumers in the US might be unaware of these laws, they still protect them from various types of frauds and losses. Following are the main agencies that enforce the antitrust laws in the United States:

Federal Trade Commission and the Federal Government (DoJ Antitrust  division):

In the United States, the main enforcers of the antitrust laws are the Federal Trade Commission and the antitrust division of the United States Department of Justice. While the authorities of the two agencies overlap in some areas, they complement each other in practice. Over time, the two agencies have also developed strong expertise in particular areas. 

For example, FTC focuses its efforts mainly on those segments of the economy where consumer spending is higher like health care, pharmaceuticals, professional services, food, energy, and certain high-tech industries like computer technology and Internet services. In order to avoid duplicate efforts, the two agencies (DoJ antitrust division and FTC) consult each other before opening any investigation.

The actions that can trigger an FTC investigation include correspondence from consumers or businesses, premerger notification filings, congressional inquiries, or articles on consumer or economic subjects. The FTC generally does not reveal information about investigations publicly. This is done in order to protect sensitive information related to the investigation as well as the individuals and the companies involved in the case. 

Many times when the FTC believes that an individual or company has violated antitrust laws or that a merger is going to violate the laws, it would try to obtain voluntary compliance through consent order with the company. The company signing a consent order does not need to admit that it has violated the law. Instead, it would be required to stop the practices outlined in FTC’s complaint and/ or take the steps necessary to eliminate the anti-competitive steps in its proposed merger. 

In the cases where a consent agreement cannot be reached, the FTC may issue an administrative complaint and/or seek injunctive relief in the federal courts. With the complaint, a formal proceeding begins which is a lot like a federal court trial but takes place before an administrative law judge.

After the submission of evidence, testimony is heard as well as witnesses are examined and cross-examined. In the case that a law violation is found, a cease and desist order will be issued. However, an initial decision by the administrative law judge can be appealed to the commission. The final decision that the commission issues may be appealed to a US Court of Appeals and finally to the supreme court. If they uphold the commission’s position, the FTC may in certain circumstances seek consumer redress in a  court. 

If the company violates an order by the FTC, the commission may also seek civil penalties or an injunction. Under some circumstances, the FTC may also move directly to a Federal court to seek an injunction, civil penalties, or for consumer redress.

In several industries like telecommunications, banks, railroads, and airlines, the DOJ holds sole antitrust jurisdiction. The FTC may also send evidence of criminal antitrust violations to the DOJ. It is the DoJ only that can obtain criminal sanctions.

 Apart from that, in the case of some mergers, there may be a need for approval from some other regulatory agency using a “public interest” standard. The two former agencies (FTC or DOJ) often work in tandem with these regulatory agencies to gain support for their investigative analysis.

States:

The state attorneys general also play an important role in the enforcement of antitrust regulations. Their role is important in the matters that are of particular importance to the local businesses or consumers.  The attorneys general can bring lawsuits on the behalf of the individual residents of their states or on the behalf of the state in cases where the state is a purchaser. States also have their own antitrust laws that the attorneys general can bring an action to enforce.

 The State attorneys general also carry out joint investigations in cooperation with the Federal authorities in the case of merger investigations.  However, when carrying out a joint investigation, there is a protocol for coordination between the state attorneys general and the Federal enforcement agencies. Confidentiality is a particularly important concern with regard to such coordinations.

Private Parties:

In a large number of cases, private parties are also allowed to bring antitrust lawsuits for the enforcement of antitrust laws. Mostly, it is individuals and businesses seeking damages for the violations of the Clayton and the Sherman act that bring antitrust lawsuits. Apart from that, private parties can seek court orders to prevent anti-competitive conduct. They can also bring lawsuits under the state antitrust laws. However, individuals and businesses are not allowed to sue under the Federal Trade Commission Act.  

Issues of International Jurisdiction:

In the case of a cross border anti-competitive conduct that can have a negative impact on the US-based consumers, the US and foreign antitrust authorities may cooperate to investigate the issue. However, since there are a large number of companies operating internationally in the United and a large number of consumers are also interacting with foreign-based businesses, a large part of the work of antitrust authorities in the US also involves cooperation with foreign antitrust authorities. There are more than 130 foreign competition agencies that cooperate with US antitrust authorities. Apart from it, there is the International Antitrust Enforcement Assistance Act of 1994 that authorizes the FTC and DOJ to enter into mutual assistance agreements with the antitrust authorities. As a part of such agreements, the US and foreign authorities may share evidence of antitrust violations as well as provide each other with investigatory assistance subject to certain restrictions. Moreover, there are certain guidelines that both the US and foreign authorities must follow in order to carry out such coordination.

Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.