ch 25&27

Two behavior that violate section 2

1. Conduct pursued by a firm that is already a monopolist is condemned as monopolization if the conduct interferes with free trade and is intended to preserve the firm's monopoly. 2. Conduct intended to capture monopoly power is condemned as an attempt to monopolize.

Defense to Price Discrimination

1. Cost justification. If the seller can justify the price reduction by demonstrating that a particular buyer's purchases saved the seller costs in producing and selling the goods, the seller will not be liable for price discrimination. 2. Meeting a competitor's prices. If the seller charged the lower price in a good faith attempt to meet an equally low price of a competitor, the seller will not be liable for price discrimination. 3. Changing market conditions. A seller may lower its price on an item in response to changing conditions affecting the market or the marketability of the goods concerned. Sellers are allowed to readjust their prices to meet the realities of the market without liability for price discrimination. Thus, if an advance in technology makes a particular product less marketable than it was previously, a seller can lower the product's price.

Differences between section 1 and 2

1. Section 1 requires two or more persons, because a person cannot contract, combine, or conspire alone. Thus, the essence of the illegal activity is the act of joining together. 2. It follows that the cases brought to the courts under Section 1 of the Sherman Act differ from those brought under Section 2. Section 1 cases are often concerned with whether an agreement (written or oral) leads to a restraint of trade. 3. Section 2, though, can apply either to one person or to two or more persons because it refers to "every person." Thus, unilateral conduct can result in a violation of Section 2. 4. Section 2 cases deal with the structure of a monopoly that exists in the marketplace. (misuse of monopoly power) Monopoly power exists when a firm has an extreme amount of market power—the power to affect the market price of its product. Both Section 1 and Section 2 seek to curtail market practices that result in undesired monopoly pricing and output behavior. For a case to be brought under Section 2, however, the "threshold" or "necessary" amount of monopoly power must already exist.

Monopolization

1.The possession of monopoly power in the relevant market. 2. "The willful acquisition or maintenance of the power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." To establish a violation of Section 2, a plaintiff must prove both of these elements—monopoly power and an intent to monopolize.

Exclusive-Dealing Contracts

A contract under which a seller forbids a buyer to purchase products from the seller's competitors is called an exclusive-dealing contract. A seller is prohibited from making an exclusive-dealing contract under Section 3 if the effect of the contract is "to substantially lessen competition or tend to create a monopoly."

Nuisance

A person may be liable if they use their property in a manner that unreasonably interferes with others' rights to use or enjoy their own property. Courts typically balance the harm caused by the pollution against the costs of stopping it. Courts have often denied injunctive relief on the ground that the hardships that would be imposed on the polluter and on the community are greater than the hardships suffered by the plaintiff.

Private actions

A private party who has been injured as a result of a violation of the Sherman Act or the Clayton Act can sue for treble damages (three times the actual damages suffered) and attorneys' fees. In some instances, private parties may also seek injunctive relief to prevent antitrust violations. A party wishing to sue under the Sherman Act must prove that: 1. The antitrust violation either caused or was a substantial factor in causing the injury that was suffered. 2. The unlawful actions of the accused party affected business activities of the plaintiff that were protected by the antitrust laws.

Vertical Restraints

A restraint of trade created by an agreement between firms at different levels in the manufacturing and distribution process.

Environmental Impact Statements

All agencies of the federal government must take environmental factors into consideration when making significant decisions. The National Environmental Policy Act requires that an environmental impact statement (EIS) be prepared for every major federal action that significantly affects the quality of the environment. An EIS must analyze the following: The impact that the action will have on the environment. Any adverse effects on the environment and alternative actions that might be taken. Any irreversible effects the action might generate. An action qualifies as "major" if it involves a substantial commitment of resources (monetary or otherwise). An action is "federal" if a federal agency has the power to control it. - Development of a ski resort by a private developer on federal land may require an EIS. Construction or operation of a nuclear plant, which requires a federal permit, necessitates an EIS, as does creation of a dam as part of a federal project. If an agency decides that an EIS is unnecessary, it must issue a statement supporting this conclusion. Private individuals, consumer interest groups, businesses, and others who believe that a federal agency's activities threaten the environment often use EISs as a means to challenge those activities.

Need for anti-trust laws arose post civil war

American public became increasingly concerned about declining competition in the marketplace. Large corporate enterprises at that time were attempting to reduce or eliminate competition by legally tying themselves together in business trusts. The most famous trust was the Standard Oil trust of the late 1800s. Participants in the trust transferred their stock to a trustee. The trustee then fixed prices, controlled production, and established exclusive geographic markets for all of the oil companies that were members of the trust. Some observers began to argue that the trust wielded so much economic power that corporations outside the trust could not compete effectively. Eventually, legislators at both the state and the federal level began to enact laws to rein in the trusts. Hence, the laws regulating economic competition in the United States today are referred to as antitrust laws. At the national level, important antitrust legislation includes the Sherman Antitrust Act passed in 1890, and the Clayton Act and the Federal Trade Commission Act passed in 1914.

price fixing

An agreement among competitors to fix prices—constitutes a per seviolation of Section 1. The agreement on price need not be explicit. As long as it restricts output or artificially fixes price, it violates the law. The Reason Behind the Agreement Is Not a Defense A price-fixing agreement is always a violation of Section 1, even if there are good reasons behind it. Price-Fixing Cartels Today Price-fixing cartels (groups) are still commonplace in today's business world, particularly among global companies. International price-fixing cartels have been alleged in numerous industries, including air freight, auto parts, computer monitors, digital commerce, and drug manufacturing.

Resale Price Maintenance Agreements

An agreement between a manufacturer and a distributor or retailer in which the manufacturer specifies what the retail prices of its products must be is known as a resale price maintenance agreement. Such agreements were once considered to be per se violations of Section 1 of the Sherman Act. Today, however, both maximum resale price maintenance agreements and minimum resale price maintenance agreements are judged under the rule of reason. The setting of a maximum price that retailers and distributors can charge for a manufacturer's products may sometimes increase competition and benefit consumers.

Restraint of Trade

Any agreement between firms that has the effect of reducing competition in the marketplace.

Group boycott

Because they involve concerted action, group boycotts have been held to constitute per se violations of Section 1 of the Sherman Act. To prove a violation of Section 1, the plaintiff must demonstrate that the boycott or joint refusal to deal was undertaken with the intention of eliminating competition or preventing entry into a given market. Although most boycotts are illegal, a few, such as group boycotts against a supplier for political reasons, may be protected under the First Amendment right to freedom of expression.

Relevant Market

Before a court can determine whether a firm has a dominant market share, it must define the relevant market. The relevant market consists of two elements: a relevant product market and a relevant geographic market.

Trade Association

Businesses in the same general industry or profession frequently organize trade associations to pursue common interests. A trade association may engage in various joint activities, such as exchanging information, representing the members' business interests before governmental bodies, and conducting advertising campaigns. Trade associations also frequently are involved in setting regulatory standards to govern the industry or profession. Generally, the rule of reason is applied to many of these horizontal actions. If a court finds that a trade association practice or agreement that restrains trade is sufficiently beneficial both to the association and to the public, it may deem the restraint reasonable. In concentrated industries, however, trade associations can be, and have been, used as a means to facilitate anticompetitive actions, such as fixing prices or allocating markets. A concentrated industry is one in which either a single firm or a small number of firms control a large percentage of market sales. When trade association agreements have substantially anticompetitive effects, a court will consider them to be in violation of Section 1 of the Sherman Act.

Local regulation

City, county, and other local governments also regulate some aspects of the environment. For instance, local zoning laws may be designed to inhibit or regulate the growth of cities and suburbs. In the interest of safeguarding the environment, such laws may prohibit certain land uses. Even when zoning laws permit a business's proposed development plan, the plan may have to be altered to lessen the development's environmental impact. In addition, cities and counties may impose rules regulating methods of waste removal, the appearance of buildings, the maximum noise level, and other aspects of the local environment.

Common law actions

Common law remedies against environmental pollution originated centuries ago in England. Those responsible for operations that created dirt, smoke, noxious odors, noise, or toxic substances were sometimes held liable under common law theories of nuisance or negligence. Today, individuals who have suffered a harm from pollution continue to rely on the common law to obtain damages and injunctions against business polluters.

Clayton Act

Congress enacted the Clayton Act to strengthen federal antitrust laws. The act was aimed at specific anticompetitive or monopolistic practices that the Sherman Act did not cover. The substantive provisions of the act—set out in Sections 2, 3, 7, and 8—deal with four distinct forms of business behavior, which are declared illegal but not criminal. For each provision, the act states that the behavior is illegal only if it tends to substantially lessen competition or to create monopoly power.

Primary Federal agencies regulating environmental law

Environmental Protection Agency (EPA)

Sherman Act section 1

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal [and is a felony punishable by fine and/or imprisonment].

Sherman Antitrust Act section 2

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [and is similarly punishable].

Penalties for Clean air act

For violations of emission limits under the Clean Air Act, the EPA can assess civil penalties of up to $25,000 per day. Additional fines of up to $5,000 per day can be assessed for other violations, such as failure to maintain the required records. To penalize those who find it more cost-effective to violate the act than to comply with it, the EPA is authorized to impose a penalty equal to the violator's economic benefits from noncompliance. Persons who provide information about violators may be paid up to $10,000. Private citizens can also sue violators. Those who knowingly violate the act, including corporate officers, may be subject to criminal penalties. For instance, knowingly making false statements or failing to report violations may be punishable by fines of up to $1 million and imprisonment for up to two years.

Public Nuisance

If a harm is to the public at large, then generally a public authority will seek relief for the public nuisance.

Private Nuisance

If an individual can identify a harm to his property rights distinct from that suffered by others, then he may get relief for the private nuisance. Looking for money damages, and injunction.

Clean Water Act

In 1972, Congress passed amendments to the FWPCA, and the amended act became known as the Clean Water Act (CWA). The CWA established the following goals: 1. make waters safe for swimming, 2. protect fish and wildlife, and 3. eliminate the discharge of pollutants into the water. The CWA also set specific schedules, which were later extended by amendment and by the Water Quality Act. Under these schedules, the EPA limits the discharge of various types of pollutants based on the technology available for controlling them.

Territorial or Customer Restrictions

In arranging for the distribution of its products, a manufacturing firm often wishes to insulate dealers from direct competition with other dealers selling its products. To do so, the manufacturer may institute territorial restrictions or attempt to prohibit wholesalers or retailers from reselling the products to certain classes of buyers, such as competing retailers. A firm may have legitimate reasons for imposing territorial or customer restrictions. For instance, an electronics manufacturer may wish to prevent a dealer from reducing costs and undercutting rivals by offering its products without promotion or customer service. In this situation, the cost-cutting dealer reaps the benefits (sales of the product) paid for by other dealers who undertake promotion and arrange for customer service. By not providing customer service (and relying on a nearby dealer to provide these services), the cost-cutting dealer may also harm the manufacturer's reputation.

Horizontal market divisons

It is a per se violation of Section 1 of the Sherman Act for competitors to divide up territories or customers.

Exemptions from Antitrust Laws

Labor - The Clayton Act—Permits unions to organize and bargain without violating antitrust laws and specifies that strikes and other labor activities normally do not violate any federal law. Insurance companies - The McCarran-Ferguson Act—Exempts the insurance business in states in which the industry is regulated. Exporters - The Webb-Pomerene Act—Allows U.S. exporters to engage in cooperative activity to compete with similar foreign associations. The Export Trading Company Act—Permits the U.S. Department of Justice to exempt certain exporters Businesspersons' Joint Efforts to Seek Government Action- The United States Supreme Court—Cooperative efforts by businesspersons to obtain legislative, judicial, or executive action are exempt unless it is clear that an effort is "objectively baseless" and is an attempt to make anticompetitive use of government processes.

Joint and Several Liability of PRPs

Liability under Superfund is usually joint and several. In other words, a PRP who generated only a fraction of the hazardous waste disposed of at a site may nevertheless be liable for all of the clean-up costs. CERCLA authorizes a party who has incurred clean-up costs to bring a "contribution action" against any other person who is liable or potentially liable for a percentage of the costs.

State regulations

Many states have enacted laws to protect the environment. State laws may restrict a business's discharge of chemicals into the air or water or regulate its disposal of toxic wastes. States may also regulate the disposal or recycling of other wastes, including glass, metal, plastic containers, and paper. Additionally, states may restrict emissions from motor vehicles.

Proving Monopoly Power

Monopoly power can be proved by direct evidence that the firm used its power to control prices and restrict output. Usually, though, there is not enough evidence to show that the firm intentionally controlled prices, so the plaintiff has to offer indirect, or circumstantial, evidence of monopoly power. To prove monopoly power indirectly, the plaintiff must show that the firm has a dominant share of the relevant market and that new competitors entering that market face significant barriers.

The Intent Requirement

Monopoly power, in and of itself, does not constitute the offense of monopolization under Section 2 of the Sherman Act. The offense also requires an intent to monopolize. A dominant market share may be the result of good business judgment or the development of a superior product. It may simply be the result of a historical accident. In these situations, the acquisition of monopoly power is not an antitrust violation. Indeed, it would be contrary to society's interest to condemn every firm that acquired a position of power because it was well managed and efficient and marketed a product desired by consumers. If a firm possesses market power as a result of carrying out some purposeful act to acquire or maintain that power through anticompetitive means, however, then it is in violation of Section 2. In most monopolization cases, intent may be inferred from evidence that the firm had monopoly power and engaged in anticompetitive behavior.

Who can sue

Most federal environmental laws provide that citizens can sue to enforce environmental regulations if government agencies fail to do so. Similarly, citizens can sue to limit enforcement actions if agencies go too far in their actions.

Minimizing Liability

One way for a business to minimize its potential liability under Superfund is to conduct environmental compliance audits of its own operations regularly. That is, the business can investigate its own operations and property to determine whether any environmental hazards exist. The EPA encourages companies to conduct self-audits and promptly detect, disclose, and correct wrongdoing. Companies that do so are subject to lighter penalties for violations of environmental laws. (Fines may be reduced as much as 75 percent.) In addition, under EPA guidelines, the EPA will waive all fines if a small company corrects environmental violations within 180 days after being notified of the violations (or 360 days if pollution-prevention techniques are involved). The policy does not apply to criminal violations of environmental laws or to violations that pose a significant threat to public health, safety, or the environment.

Rule of reason violations

Other agreements, even though they result in enhanced market power, do not unreasonably restrain trade and are therefore lawful. Using the rule of reason, the courts analyze anticompetitive agreements that allegedly violate Section 1 of the Sherman Act to determine whether they actually constitute reasonable restraints of trade. When analyzing an alleged Section 1 violation under the rule of reason, a court will consider the following factors: The purpose of the agreement. The parties' ability to implement the agreement to achieve that purpose. The effect or potential effect of the agreement on competition. Whether the parties could have relied on less restrictive means to achieve their purpose.

Other federal agencies

Other federal agencies with authority to regulate specific environmental matters include the Department of the Interior, the Department of Defense, the Department of Labor, the Food and Drug Administration, and the Nuclear Regulatory Commission.

Corporate mergers

Person or business organization cannot hold stock or assets in more than one business when "the effect . . . may be to substantially lessen competition." Section 7 is the statutory authority for preventing mergers or acquisitions that could result in monopoly power or a substantial lessening of competition in the marketplace. Section 7 applies to both horizontal and vertical mergers. A crucial consideration in most merger cases is market concentration. Determining market concentration involves allocating percentage market shares among the various companies in the relevant market. When a small number of companies share a large part of the market, the market is concentrated.

Standards for Equipment

Regulations generally specify that the best available control technology, or BACT, be installed. The EPA issues guidelines as to what equipment meets this standard. Essentially, the guidelines require the most effective pollution-control equipment available. New sources must install BACT equipment before beginning operations. Existing sources are subject to timetables for the installation of BACT equipment and must immediately install equipment that utilizes the best practical control technology, or BPCT. The EPA also issues guidelines as to what equipment meets this standard.

Air pollution Mobile sources

Regulations governing air pollution from automobiles and other mobile sources specify pollution standards and establish time schedules for meeting the standards. The EPA periodically updates the pollution standards in light of new developments and data, usually reducing the amount of emissions allowed. Authority to Regulate Greenhouse Gases Many scientists and others around the world maintain that greenhouse gases, such as carbon dioxide , contribute to climate change. The Clean Air Act, as amended, however, does not specifically mention emissions. Therefore, the EPA did not regulate emissions from motor vehicles until after the Supreme Court ruled that it had the authority to do so. The EPA later concluded that greenhouse gases, including emissions, do constitute a public danger. In fact, the EPA now also regulates greenhouse gas emissions from airplanes.

Attempts to Monopolize

Section 2 also prohibits attempted monopolization of a market, which requires proof of the following three elements: 1. Anticompetitive conduct. 2. The specific intent to exclude competitors and garner monopoly power. 3. A "dangerous" probability of success in achieving monopoly power. The probability cannot be dangerous unless the alleged offender possesses some degree of market power. Only serious threats of monopolization are condemned as violations.

Price discrimination

Seller charges different prices to competing buyers for identical goods or services. Prohibits price discrimination that cannot be justified by differences in production costs, transportation costs, or cost differences due to other reasons. In short, a seller cannot charge one buyer a lower price than it charges that buyer's competitor. The seller must be engaged in interstate commerce, the goods must be of like grade and quality, and the goods must have been sold to two or more purchasers. In addition, the effect of the price discrimination must be to substantially lessen competition, tend to create a monopoly, or otherwise injure competition. Without proof of an actual injury resulting from the price discrimination, the plaintiff cannot recover damages. Note that price discrimination claims can arise from discounts, offsets, rebates, or allowances given to one buyer over another. Moreover, giving favorable credit terms, delivery, or freight charges to some buyers, but not others, can also lead to allegations of price discrimination. For instance, when a seller offers goods to different customers at the same price but includes free delivery for certain buyers, it may violate Section 2 in some circumstances.

Exclusionary Practices

Sellers or lessors cannot condition the sale or lease of goods on the buyer's or lessee's promise not to use or deal in the goods of the seller's competitor. In effect, this section prohibits two types of vertical agreements involving exclusionary practices—exclusive-dealing contracts and tying arrangements.

Per se violation

Some restraints are so substantially anticompetitive that they are deemed per se violations—illegal per se(inherently)—under Section 1. OBVIOUS, no redemption, not listening even its a good reason. You did it you are liable Ex. Price Fixing 2 grocery store in town and the 3rd one is coming to town, the two decide to reduce prices so low to drive out competitor.

Strict Liability of PRPs

Superfund imposes strict liability on PRPs, and that liability cannot be avoided through transfer of ownership. Thus, selling a site where hazardous wastes were disposed of does not relieve the seller of liability, and the buyer also becomes liable for the clean-up. Liability also extends to businesses that merge with or buy corporations that have violated CERCLA. A parent corporation is not automatically liable for the violations of its subsidiary. It can be held liable, however, if the subsidiary was merely a shell company or if the parent corporation participated in or controlled the facility.

Potentially Responsible Parties

Superfund provides that when a release or a potential release of hazardous chemicals from a site occurs, the following persons may be held responsible for cleaning up the site: The person who generated the wastes disposed of at the site. The person who transported the wastes to the site. The person who owned or operated the site at the time of the disposal. The current owner or operator of the site. A person falling within one of these categories is referred to as a potentially responsible party (PRP). If the PRPs do not clean up the site, the EPA can clean up the site and recover the clean-up costs from the PRPs.

Permit System for Point-Source Emissions

The CWA established a permit system for regulating discharges from "point sources" of pollution, which include industrial, municipal, and agricultural facilities. Under this system, called the National Pollutant Discharge Elimination System (NPDES), any point source emitting pollutants into water must have a permit. Pollution not from point sources, such as runoff from small farms, is not subject to much regulation. NPDES permits can be issued by the EPA and authorized state agencies and Indian tribes, but only if the discharge will not violate water-quality standards. Permits must be reissued every five years. Although initially the NPDES system focused mainly on industrial wastewater, it was later expanded to cover stormwater discharges. In practice, the NPDES system under the CWA includes the following elements: National effluent (pollution) standards set by the EPA for each industry. Water-quality standards set by the states under EPA supervision. A discharge permit program that sets water-quality standards to limit pollution. Special provisions for toxic chemicals and for oil spills. Construction grants and loans from the federal government for publicly owned treatment works, primarily sewage treatment plants.

Stationary Sources

The Clean Air Act also authorizes the EPA to establish air-quality standards for stationary sources (such as manufacturing plants). But the act recognizes that the primary responsibility for implementing these standards rests with state and local governments. The EPA sets primary and secondary levels of ambient standards—that is, maximum permissible levels of certain pollutants—and the states formulate plans to achieve those standards. Different standards apply depending on whether the sources of pollution are located in clean areas or polluted areas and whether they are existing sources or major new sources.

Clean Water Act

The Clean Air Act focuses on controlling hazardous air pollutants (HAPs)—those likely to cause death or a serious irreversible or incapacitating condition, such as cancer or neurological or reproductive damage. The act requires the EPA to list all HAPs on a prioritized schedule. In all, nearly two hundred substances—including asbestos, benzene, beryllium, cadmium, mercury, and vinyl chloride—have been classified as hazardous. They are emitted from stationary sources by a variety of business activities, including smelting (melting ore to produce metal), dry cleaning, house painting, and commercial baking. Instead of establishing specific emissions standards for each hazardous air pollutant, the Clean Air Act requires major new sources to use pollution-control equipment that represents the maximum achievable control technology, or MACT, to reduce emissions. The EPA issues guidelines as to what equipment meets this standard.

Superfund

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),commonly known as Superfund, regulates the clean up of disposal sites in which hazardous waste is leaking into the environment. CERCLA, as amended, has four primary elements: It established an information-gathering and analysis system that enables the government to identify chemical dump sites and determine the appropriate action. It authorized the EPA to respond to emergencies and to arrange for the clean-up of a leaking site directly if the persons responsible fail to clean up the site within a reasonable time. It created a Hazardous Substance Response Trust Fund (also called Superfund) to pay for the clean-up of hazardous sites using funds obtained through taxes on certain businesses. It allowed the government to recover the clean-up costs from persons who were (even remotely) responsible for hazardous substance releases.

Safe drinking water act

The Safe Drinking Water Act requires the EPA to set maximum levels for pollutants in public water systems. The operators of public water systems must come as close as possible to meeting the EPA's standards by using the best available technology that is economically and technologically feasible. Under the act, each supplier of drinking water is required to send an annual statement describing the source of its water to every household it supplies. The statement must also disclose the level of any contaminants in the water and any possible health concerns associated with the contaminants.

Defining Monopoly Power

The Sherman Act does not define monopoly. In economic theory, monopoly refers to control of a specific market by a single entity. It is well established in antitrust law, however, that a firm may be a monopolist even though it is not the sole seller in a market. Additionally, size alone does not determine whether a firm is a monopoly.

Market Power

The ability to raise prices above those that would be charged in a competitive market.

Enforcement and Exemptions

The federal agencies that enforce the federal antitrust laws are the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), which was established by the Federal Trade Commission Act. Only the DOJ can prosecute violations of the Sherman Act, which can be either criminal or civil offenses. Violations of the Clayton Act are not crimes, but the act can be enforced by either the DOJ or the FTC through civil proceedings.

Interlocking Directorates

The practice whereby individuals serve as directors on the boards of two or more competing companies simultaneously. Specifically, no person may be a director for two or more competing corporations at the same time if either of the corporations has capital, surplus, undivided profits, or competitive sales that exceed a specified threshold amount. The Federal Trade Commission adjusts the threshold amounts each year.

Relevant Product Market

The relevant product market includes all products that have identical attributes (all brands of tea, for instance), as well as products that are reasonably interchangeable with them. Products are considered reasonably interchangeable if consumers treat them as acceptable substitutes. For instance, tea and coffee are reasonably interchangeable, so they may be included in the same relevant product market. Establishing the relevant product market is often the key issue in monopolization cases because the way the market is defined may determine whether a firm has monopoly power. When the product market is defined narrowly, the degree of a firm's market power appears greater.

Relevant Geographic Market

The second component of the relevant market is the geographic extent of the market in which the firm and its competitors sell the product or services. For products that are sold nationwide, the geographic boundaries of the market can encompass the entire United States. If transportation costs are significant or a producer and its competitors sell in only a limited area (one in which customers have no access to other sources of the product), then the geographic market is limited to that area. A national firm may thus compete in several distinct areas and have monopoly power in one geographic area but not in another. Generally, the geographic market is that section of the country within which a firm can increase its price a bit without attracting new sellers or losing many customers to alternative suppliers outside that area. Of course, the Internet is changing perceptions of the size and limits of a geographic market. It may become difficult to perceive any geographic market as local, except for products that are not easily transported, such as concrete.

Horizontal restraints

The term horizontal restraint is encountered frequently in antitrust law. A horizontal restraint is any agreement that in some way restrains competition between rival firms competing in the same market. Horizontal restraints may include price-fixing agreements, group boycotts, market divisions, trade associations, and joint ventures.

Section 1 assumptions

The underlying assumption of Section 1 of the Sherman Act is that society's welfare is harmed if rival firms are permitted to join in an agreement that consolidates their market power or otherwise restrains competition. The types of trade restraints that Section 1 of the Sherman Act prohibits generally fall into two broad categories: horizontal restraints and vertical restraints.

Defenses

There are a few defenses to liability under CERCLA. The most important is the innocent landowner defense, which may protect a landowner who acquired the property after it was used for hazardous waste disposal. To succeed in this defense, the landowner must show, among other things, that at the time the property was acquired, she or he had no reason to know that it had been used for hazardous waste disposal. The landowner must also show that at the time of the purchase, she or he undertook "all appropriate inquiries." That is, he or she investigated the previous ownership and uses of the property to determine whether there was reason for concern about hazardous substances. In effect, then, this defense protects only property owners who took precautions and investigated the possibility of environmental hazards before buying the property.

Purpose of antitrust laws

To foster competition. Behind these laws lies our society's belief that competition leads to lower prices, better products, a wider selection of goods, and more product information. 1. Regulate business conduct to promise forms of competition that benefit society 2. Rein in the unrestrained exercise of market power

Negligence and strict liability

Toxic tort - A theory of negligence or strict liability (depending on the circumstances) against those who pollute the environment with toxic substances. A negligence action is based on a business's alleged failure to use reasonable care toward a party whose injury was foreseeable and was caused by the lack of reasonable care. For instance, employees might sue an employer whose failure to use proper pollution controls has contaminated the air, causing the employees to suffer respiratory illnesses. Lawsuits for personal injuries caused by exposure to a toxic substance, such as asbestos, radiation, or hazardous waste, have given rise to a growing body of tort law known as toxic torts. Businesses that engage in ultrahazardous activities—such as the transportation of radioactive materials—are strictly liable for any injuries the activities cause. In a strict liability action, the injured party does not have to prove that the business failed to exercise reasonable care.

Tying Arrangements

When a seller conditions the sale of a product (the tying product) on the buyer's agreement to purchase another product (the tied product) produced or distributed by the same seller, a tying arrangement results. The legality of a tying arrangement (or tie-in sales agreement) depends on several factors, such as the purpose of the agreement. Courts also focus on the agreement's likely effect on competition in the relevant markets (the market for the tying product and the market for the tied product). Section 3 of the Clayton Act has been held to apply only to commodities, not to services. Tying arrangements, however, can also be considered agreements that restrain trade in violation of Section 1 of the Sherman Act. Thus, cases involving tying arrangements of services have been brought under Section 1 of the Sherman Act. Although earlier cases condemned tying arrangements as illegal per se, courts now evaluate tying agreements under the rule of reason.

Oil pollution Act

When more than 10 million gallons of oil leaked into Alaska's Prince William Sound from the Exxon Valdez supertanker in 1989, Congress responded by passing the Oil Pollution Act. (At that time, the Exxon Valdez disaster was the worst oil spill in U.S. history, but the British Petroleum oil spill in the Gulf of Mexico in 2010 surpassed it.) Under the Oil Pollution Act, any oil facility, oil shipper, vessel owner, or vessel operator that discharges oil into navigable waters or onto an adjoining shore may be liable for clean-up costs and damages. The polluter can also be ordered to pay for damage to natural resources, private property, and the local economy, including the increased cost of providing public services.

Joint ventures

When two or more individuals or business entities join together in a particular commercial enterprise, it is called a joint venture. Joint ventures undertaken by competitors are also subject to antitrust laws. If a joint venture does not involve price fixing or market divisions, the agreement will be analyzed under the rule of reason. Whether the joint undertaking violates Section 1 will then depend on the factors stated earlier in this chapter. A court will look at the venture's purpose, the potential benefits relative to the likely harms, and whether there are less restrictive alternatives for achieving the same goals.

Monopoly

a market in which there is a single seller or a firm that, although not the sole seller in the market, can nonetheless substantially ignore rival firms in setting a selling price for its product or can in some way limit rivals from competing in the market.

Predatory pricing a violation of sec 2

occurs when one firm (the predator) attempts to drive its competitors from the market by selling its product at prices substantially below the normal costs of production. Once the competitors are eliminated, the predator presumably will raise its prices far above their competitive levels to recapture its losses and earn higher profits.

Ocean Dumping Act

regulates the transportation and dumping of pollutants into ocean waters. It prohibits the ocean dumping of any radiological, chemical, and biological warfare agents and high-level radioactive waste. The act also established a permit program for transporting and dumping other materials, and designated certain areas as marine sanctuaries. Each violation of any provision or permit requirement in the Ocean Dumping Act may result in a civil penalty of up to $50,000. A knowing violation is a criminal offense that may result in a $50,000 fine, imprisonment for not more than a year, or both. A court may also grant an injunction to prevent an imminent or continuing violation.

Monopoly power

the power to control prices or exclude competition in a relevant market.