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How could antitrust laws affect your business?

| Jan 9, 2020 | Uncategorized

When you hear the words “antitrust law,” what comes to mind? Do the words conjure images of Mark Zuckerberg sitting before congress, forced to defend Facebook’s actions? Do they sound like hurdles to clear on the way to a successful merger or acquisition? Do they give you a warm feeling because they mean the law favors a free market? Or do they remind you that you really want to watch the Avalanche and Nuggets games?

If you’re in the last camp, you’re not alone. The nation’s antitrust laws recently got dragged front and center into the world of Colorado sports and business. And in a case that garnered national attention, Denver-based Altitude Sports and Entertainment sued Comcast for antitrust violations. In short, Altitude claims Comcast is using unfair practices to keep Altitude out of homes and off TVs. No Avalanche games. No Nuggets.

What do antitrust laws do?

As the Department of Justice states on its website, the nation’s antitrust laws aim to preserve a fair and competitive market. They do this by banning or limiting practices that could choke off competition for different goods or services, such as:

  • Monopolizing, or conspiring to monopolize, a market—often by buying off or burying competitors
  • Using contracts or other means to prevent competitors from being able to conduct trade fairly
  • Conspiring with other businesses to set artificial prices
  • Conspiring to rig bids for business
  • Pursuing mergers and acquisitions that could substantially reduce market competition

There are several federal antitrust laws, and Colorado has its own antitrust law. That means the laws are enforced by various agencies and can lead to a variety of fines and punishments. For example, Colorado’s antitrust law assigns enforcement directly to the state’s attorney general and makes it a felony to restrict trade, monopolize a market or practice bid-rigging.

What can you do if another companys illegal practices are driving you out of business?

The different antitrust laws offer a mix of criminal and civil remedies. Some of them allow individual businesses to seek recovery for the damages they suffered due to antitrust violations. As the Federal Trade Commission notes in its summary of the three main antitrust laws, the Clayton Act gives private parties two powers:

  • If they are harmed by their competitors’ antitrust violations, they can use for triple damages
  • They can also request court orders to block their competitors from engaging in the same behavior in the future

Colorado’s antitrust law also allows for civil claims of triple damages, and it notes that all penalties are cumulative. So if your competitor is found guilty of antitrust crimes, it may still need to pay any civil fines.

Looking at the antitrust laws from all angles

There are some antitrust violations, such as price-fixing and bid-rigging, that are pretty clear-cut and nearly indefensible. Others can be harder to spot. After all, every business aims at success, and success usually means claiming as large a market share as possible. So where’s the line? When is the market share too large? What practices are unfair?

The answers to these questions aren’t always clear or obvious. They can change from case to case and market to market. However, if your business is suffering due to another’s unfair practices, you want to understand your case. If your business is growing, you might look to grow through strategic acquisitions. You want to make sure they won’t run you afoul of the law.

The words “antitrust law” are certain to evoke different feelings for different people. The important thing is to remember they exist and to ask whenever you think they might apply to your situation.