Key Terms
Free enterprise
Private, consensual production and distribution system, conducted for profit, relatively free of government interference
Theory
Given freedom, businesses will operate efficiently and be responsive to consumer needs.
Weakness
Assumes businesses will compete fairly and act ethically. History showed they wouldn't.
Result
Companies outside the trust went bankrupt; new competitors were blocked from entering the market; consumer prices rose b
Monopoly
Control or advantage by one supplier or producer over a commercial market in a given region
Monopoly power
Power to fix prices unilaterally or exclude competition
Relevant market has two components
(1) product or service market and (2) geographic area.
Strategic point
A defendant wants the broadest possible product market definition (more competitors = lower market share). A plaintiff w
Third element
The business must have intent to acquire and use its monopoly power.
Example
If competitors go bankrupt due to an economic downturn and one company survives, that company is not automatically an il
Restraint on trade
Agreement between two or more businesses intended to eliminate competition, create a monopoly, artificially raise prices
Unreasonable restraint on trade
A restraint producing a significant anticompetitive effect; violates antitrust laws
Concerted action
Planned, arranged, agreed-upon action by parties acting together
Horizontal agreements
Between direct competitors (same level of the supply chain)
Vertical agreements
Between businesses at different levels of the distribution chain