Magazine article Business Credit

Antitrust in This Internet Era: More Myths to Dispel and Realities to Understand

Magazine article Business Credit

Antitrust in This Internet Era: More Myths to Dispel and Realities to Understand

Article excerpt

Antitrust statutes haven't changed. Yet, the means by which most credit executives obtain and transmit credit information is changing on a daily basis. And, beyond the swap of trade references, some credit groups conduct their trade meetings electronically. Credit executives, today-more than ever-need to know what can or cannot be done, what can or cannot be discussed, when and how credit terms may be adjusted, and what is covered under the various antitrust statutes. This article will cover the oft-confused topics:

* What do the various "antitrust" statutes mean, and how do they differ?

* What constitutes "Restraint of Trade," "Unfair Competition" and "Conspiracy"?

* What credit information may be exchanged among business people, with specific emphasis on the transmission of electronic data?

What special safeguards must be utilized in conducting a "credit exchange group" online?

STATUTES WHICH CONTROL ANTITRUST ACTIVITIES

The Sherman Antitrust Act of 1890 (15 U.S.C. (sec)1-7) prohibits contracts, combinations in form of trust or otherwise, conspiracies in restraint of trade in interstate commerce or with foreign nations and declares that any person who combines, contracts or conspires with another or others to restrain trade or commerce, shall be guilty of a felony. Further, any person who monopolizes or attempts to monopolize, or who combines, contracts or conspires with another or others to monopolize trade or commerce among the United States or with foreign nations, shall be guilty of a felony.

The Clayton Act of 1914 (15 U.S.C.(sec) 12 - 27 and 29 U.S.C. (sec) 52 & 53) followed the Sherman Act and was created to 11 correct" defects in the Sherman Act. This statute prohibits acts which will reduce competition or create a monopoly. Congress passed the Clayton Act in order to promote competition through protection of viable, small, locally-owned businesses. Under the Clayton Act, it is unlawful to enter into (a) leases or sales on condition that lessee or purchaser shall not use or deal in the commodities of a competitor of the lessor or seller, (b) exclusive dealing arrangements and (c) tying leases and agreements.

The Robinson-Patman Act of 1936 was partially an amendment to the Clayton Act. The Robinson-Patman Act makes it unlawful for any person engaged in commerce to "discriminate in price between different purchasers of commodities of like grade and quality...where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line or commerce..." (15 U.S.C.(sec) 13[a]) The Robinson-Patman Act is designed to prevent discriminatory practices adversely affecting free competitive enterprise, to preserve competition generally and to protect small businesses which are usually unable to buy in quantity against large competitors. It is equally unlawful for any person engaged in commerce "knowingly to induce or receive a discrimination in price which is prohibited by this section." (15 U.S.C.(sec) 13[f])

Violations of 15 U.S.C.(sec) 13(a) are subject to civil liability. However, Section 3 of the Robinson-Patman Act (15 U.S.C.(sec) 13[a]) provides criminal liability for any person who discriminates through the use of discounts, rebates, allowances or advertising service charges, or by selling at unreasonably low prices to destroy competition or a competitor. This section, technically, is not an "antitrust" law.

The Federal Trade Commission Act of 1914 prohibits all "unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce." (15 U.S.C.(sec) 45) The Federal Trade Commission Act is the broadest of all antitrust statutes. Its coverage includes acquisitions, mergers, monopolies, unfair trade practices, unfair arrangements between suppliers and dealers, deceptive sales approaches, discrimination in price, services or facilities. …

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