The purpose of antitrust law is to protect our free enterprise system from the ills of monopolies, whether those ills come from a single actor or multiple actors conspiring together.
Market power can be the result of offering superior products or services, producing these products or services at a lower price, or being more innovative than competitors. In these situations, a company ought to enjoy the reward of their efforts.
However, competitors, consumers, and our society are harmed when companies achieve or maintain their market power through “monopolization.” Monopolization occurs when a company or companies illegally wield their market power to exclude other competitors. These anticompetitive actions hurt our society by increasing prices, lowering production, and/or reducing innovation.
Examples of potential anticompetitive conduct include, but are not limited, to the following:
- Price Fixing: This is an agreement between competitors to maintain prices at a certain level. These agreements negatively impact an ultimate buyer because, absent the agreement, the buyer would benefit from lower prices that result from competitors’ price competition.
- Market Dividing: This is an agreement between competitors to divide markets by geography, customer, line of commerce, supplier, or a combination thereof. This allows competitors to maintain a monopoly in a market without encroachment from its fellow conspirator.
- Output Fixing: This is an agreement between competitors to fix the output of their products or services. By fixing output, the competitors artificially decrease the supply of the product or service and artificially increase prices that consumers pay.
- Boycotting / Refusal to Deal: Most of the time an illegal boycott or refusal to deal is an agreement between multiple competitors but can be a single actor. These are situations where competitor(s) prevent another from accessing resources necessary to compete through a concerted effort to boycott or refusal to deal.
- Bid Rigging: Bid rigging is a conspiracy amongst competitors to select the bid winner prior to an auction. The losing conspirers intentionally submit low bids known to be losing bids, while the winning bidder submits a bid that is higher than what it would be if there was actual competition in the bidding process. This prevents a competitive bidding process and artificially increases prices to consumers.
- Predatory Pricing: A monopoly can push out competitors by deflating prices below a profitable level. Effectively, this pushes out competitors of the market. Many do not have the financial resources to maintain the unprofitable price point for as long of a duration as the monopolist. After pushing the competitors out, the monopoly enacts a scheme to raises prices above what they would be with multiple competitors in the market.
- Tying: Tying occurs when a monopolist leverages a monopoly in a product or service to force a consumer to buy a second product or service, which is sold in a competitive market. Effectively, this pushes out other producers of the second product or service and/or forces the consumer to buy something he or she did not want or would have purchased elsewhere.
The attorneys at Shelby Roden have a long history of prosecuting cases against anticompetitive actors, such as Microsoft in the 2000s. We currently represent Healthcare providers in a nationwide lawsuit against Blue Cross Blue Shield. Blue Cross Blue Shield controls over 90% of some insurance markets. This anticompetitive conduct has directly led to lower reimbursement rates for providers and higher premiums for subscribers.