Antitrust

Antitrust is an area of law concerned with preventing companies from using their market power to eliminate the effects of competition in a free market, in order to increase their profits at the expense of the consumer. This area of law is known by different names around the world, being called anti-monopoly law in some places and competition law in others.

Antitrust is premised on the belief that competition has a positive effect on free markets, and should be encouraged. Where many manufacturers provide the same product, each will try to increase its sales by finding ways to make its own product more attractive than those of its competitors. Some manufacturers will try to sell the product at a lower cost, while others will try to improve the quality of the product, or develop innovative new features to attract consumers.

However, if one manufacturer controls the entire market for a product, or if all manufacturers cooperate in controlling such a market, then the incentive to reduce prices and improve quality disappears. Furthermore, a manufacturer or group of manufacturers with sufficient power over the market can prevent new competitors from entering the field, either by acquiring the competitor, or by reducing prices just long enough to drive the competitor out of business.

Most countries have enacted a collection of laws designed to punish anti-competitive conduct conduct, particularly conduct that is seen to burden consumers with artificially high prices, prevent increases in the quality of goods, prevent useful innovations, and artificially induce the failure of competing businesses.