Companies of all sizes face the risk of antitrust litigation, though the risk substantially increases the larger a business becomes. Business owners must be acutely aware of the antitrust laws regulating their business practices. However, they must also be aware of where this risk comes from to mitigate it.
BACKGROUND
In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. The main statutes are codified in three Acts – the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914.
WHO CAN FILE ANTITRUST CLAIMS?
There are three parties who generally can file antitrust claims against a business:
- The government: The Federal Trade Commission or state governments could take actions against a business for violating competition laws. Sometimes, state governments and attorney generals will join forces in a class action against large companies.
- Competitors: If competitors in the same industry claim they have evidence of antitrust actions, they could also file a claim against the company.
- Former employees: In some cases, former employees might also file class-action antitrust lawsuits. For example, in 2019 one such lawsuit stemmed from a 2019 case where several companies had violated antitrust laws by agreeing not to poach employees.
In addition, consumers can file antitrust lawsuits as well.
One of the main risks companies face is the escalation of these cases. For example, one competitor might file an initial complaint, but more might join in.
EXAMPLE – AMAZON FACING CONSUMER-LED ANTITRUST LAWSUIT
Long before it held the reputation of the largest online retailer, Amazon mainly focused on selling books – both hard copies and e-books. The company has branched out over the years, but this line of business is causing current trouble for the company.
Business Insider reports that Amazon customers filed a lawsuit claiming that the company worked with large publishing houses behind the scenes to increase the price of e-books. According to the report, Amazon made agreements with these publishing houses that included “most favored nation” clauses. Essentially, these prevent the third-party from listing lower prices on their products on competing sites.
This is not the only antitrust action Amazon is facing. The company is also involved in the federal government’s lawsuit against several large tech companies claiming they are controlling the digital market.
Accusations and lawsuits like this can escalate and multiply quickly. Business owners must take care to respond to these claims effectively as soon as they arise.
