Antitrust Law: In The Spirit of CompetitionBy Trina L.C. SchillerI have been a member of iCop for a long time now. One of my favorite benefits of membership is reading jl. Scott’s “Internet Marketing Trade Journal.” She really puts out a great ezine.
Anywho… The reason I mention the Trade Journal is because of an article I recently read there. This article was about antitrust laws, and I learned a thing or two from it. Furthermore, it prompted me to do some investigating on my own, and I’d like to share that information with you.
Antitrust laws were created to promote competition in business. Competition is a very positive thing for the consumer. Competiton in business, allows for the consumer to shop around for the best product at the best price. Without competition in business, we, as consumers would be at the mercy of manufacturers, and would stuck paying top dollar for everything.
Remember when AT&T was the only telephone service? The government stepped in and broke up their monopoly on communication services, to allow other companies to offer services at a competitive rate. Now we have more communication options, and can shop for the best one based our needs and budget.
However, antitrust laws are not just applicable to big corporations. These laws apply to anyone selling anything, including Internet marketers.
The application of these laws covers quite a few areas, here are just a few:
Price fixing Restricting Output Market division Boycotts Restricted advertising Tie-in salesPrice Fixing – Agreements made between competitors to maintain a specific price, or credit terms, on a product or service. Blatant price fixing is subject to criminal prosecution.
What this means is that if I am selling a product and offer resale rights to it, I cannot dictate to the reseller at what price they can sell it for. The best I can do is to list a MSRP (manufacturer suggested retail price). I have to allow the reseller to compete with my price. If the reseller wants to sell the product for 2 cents less than what I am selling it for, they have the right to do that.
Market division – This refers to competitors lining out market territories. They agree to split the market and each work a predetermined share of it, locking out others not participating in the agreement. This type of joint venture is illegal.
Boycotts – This situation occurs when competitors agree not to do business with specific other persons or businesses, forcing another to pay an inflated price.
For example: Let’s say that I manufacture lawn mowers. I work a deal with my engine supplier to get a discount on engines for my mowers, which is less than his competitor sells them for. Then I get my engine supplier to boycott my competitor, forcing him [my competition] to buy his engines at a higher price, resulting in my competitor’s mowers costing the consumer more to buy than mine. Restricted advertising – “Restrictions on price advertising can be illegal if they deprive consumers of important information. Restrictions on non-price advertising also may be illegal if the evidence shows the restrictions have anticompetitive effects and lack reasonable business justification. The FTC recently charged a group of auto dealers with restricting comparative and discount advertising to the detriment of consumers.” http://www.ftc.gov/bc/compguide/illegal.htm Tie-in sales – This is when the condition of sale for one product, or service requires the purchase of another, which may, or may not be desirable to the consumer, or which can be purchased elsewhere for less.
These are just a few examples of antitrust law applications. I picked these to share with you for a specific reason. That reason being; many Internet marketing gurus are in violation of these laws on a regular basis. They refer to it as joint venturing. Whether or not they knowingly violate these laws is a matter of speculation. Perhaps gurus don’t know everything. Perhaps they don’t know that limiting the supply of a product, to drive up the price, is illegal. (How many gurus can you think of that have been doing that lately?) At least now you know these things.
For more information on U.S Antitrust Law
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