Compliance Blog

Antitrust and Competition Law Basics That All Employees Should Know

July 11, 2022 | Carole Walters

While much of the latest news about antitrust focuses on big tech companies, antitrust and competition law applies to all industries. The US Department of Justice (DOJ) recently acted in a case involving the merger of two publishing houses and in another between two airlines that would result in “higher fares, fewer choices and lower quality service.” And that’s the essence of US antitrust laws — to promote and protect competition in the marketplace and ensure consumers benefit from lower prices, higher quality, more selection and better customer service.

Regardless of the industry or sector, all employees should know how to recognize antitrust red flags, avoid behaviors that may be questionable or illegal — such as discussing pricing with a competitor — and understand their responsibility to report concerns. Without ongoing employee training on antitrust principles and how competition laws affect business activities, organizations risk violations that can result in heavy fines, serious civil and criminal penalties and even imprisonment.

Some common questions and topics that antitrust training should address include:

What are anticompetitive practices?

Anticompetitive practices include activities like price fixing, group boycotts and exclusive dealing contracts or trade association rules. Price fixing is one of the most widely publicized violations and involves agreements between competitors to fix, raise, lower, stabilize prices or establish a range of prices — a minimum price, a maximum price, or a common pricing system.

There’s an antitrust risk with trade associations and professional groups when they no longer act independently, or collaboration enables them to control a significant market together. Exchanging pricing or other sensitive business data among competitors in an association is also risky, and it is illegal for the trade association to control or suggest the prices its members charge.

What are the major US antitrust laws?

The Sherman Act, the Federal Trade Commission Act and the Clayton Act are the major US antitrust laws that the DOJ and the Federal Trade Commission (FTC) enforce. Businesses must also comply with state antitrust statutes that are enforced by the states’ attorney generals. Depending on the offense, violations of these laws can incur both civil and criminal charges.

The Sherman Act of 1890 was the first federal act that outlawed monopolistic business practices. It’s named after Senator John Sherman of Ohio, who was a chair of the Senate finance committee and Secretary of the Treasury. The Act includes practices and agreements to fix certain prices, rig bids, divide or allocate markets among competitors, and impose certain group boycotts.

The Clayton Act of 1914 amended the Sherman Act and prohibits mergers or acquisitions that are likely to lessen competition or increase consumer prices. The Clayton Act also requires companies to give the government advanced notice about plans for large mergers or acquisitions. It also prohibits practices such as tying arrangements, exclusive dealing arrangements and interlocking boards of directors, where the same person serves on the boards of competing companies.

The Federal Trade Commission Act and the Federal Trade Commission were created to protect consumers and competition by preventing anticompetitive, deceptive and unfair business practices through law enforcement, advocacy and education. A recent case involves consumers’ right to repair their products and illegal warranty terms, and another in which consumers were charged for ‘free trial’ offers for cosmetics and weight loss supplements.

 What about employment practices that may lead to an antitrust violation?
Antitrust laws also apply to hiring and compensation decisions, specifically wage fixing and no-poaching agreements. Wage fixing is when one company agrees with another company to exchange employee salary information or other terms of compensation. A no-poaching agreement is where two companies agree not to hire or solicit each other’s employees.

 Traliant Insight

As part of an effective compliance training program, providing antitrust and competition law training strengthens efforts to manage and minimize the risk of violations, and helps ensure that employees, at all levels, understand their responsibility to recognize antitrust red flags and report their concerns.

Access a free trial of Traliant’s Antitrust and Competition Law course: