What is the Usefulness of Anti Trust Laws

In an economy driven by supply and demand, many players can use various methods to manipulate and reorient market trends towards gaining an unfair edge over their competitors. The market economy is usually dependent on the producers’ ability to sell, the consumers’ desire regarding various products and the consumers’ ability to buy the same. Any manipulation of one or more of these factors could result in a market derailment, which can shift the balance and favor one producer than the others. Most of all, the consumers will stand to lose from such monopolization, as competition would drive better quality, better prices and variety in selection. In this context, laws play a vital role in maintaining the market balance. This article will further elaborate the reason behind having antitrust laws in a market-driven economy.

Legitimate monopolies and monopolization

When considering the U.S. market, companies with better products, better business skills, better consumer trust, as well as a reasonable price may dominate in certain markets. Such domination is legally allowed, as long as the products they make meet government standards and the practices undertaken by the company remain within the legal framework and best industry practices. Thus, certain companies may enjoy a monopoly in relation to their market. At times, certain companies may enjoy a natural monopoly with regard to their products, as they may be the only supplier or provider of a certain product or a service. However, none of the companies should undertake practices that would lead to ”monopolization” as this would derail the balance in the market. Therefore, companies cannot team up with other competitors and dictate a higher price from the consumers or undertake practices, which can chase away the competitors from the market in order to create an artificial monopoly.

Principles of antitrust

According to legal experts, antitrust laws can be defined as “laws and regulations designed to protect trade and commerce from unfair methods of business competition.” These laws are based on three basic principles., First, consumers can buy goods and services at prices that are based on or near the costs of production (not exorbitant compared to costs). Second, consumer preferences are reflected in the quality and quantity of goods and services, and third, new businesses have the opportunity to enter the market and compete on the merits.

The applicability of antitrust laws

From the consumers’ point of view, antitrust laws would prevent unnecessary price fluctuations of certain products, as well as having to pay exorbitant prices greatly exceeding production costs. At the same time, it will give the consumers a high-quality product, as products with a bad reputation would automatically lose their market footing with time. In addition, having many different companies to choose from would give the consumers the option to move away from one product in instances when they do not like any aspect of the product or the company in question.

The same applies when the applicability of antitrust laws is viewed from the point of view of the businesses. Thus, effective, innovative, reasonable and high-quality products will gain market leadership and the ineffective competitors would be eliminated from the market with time. For businesses that depends on raw material or other supplies, having a competitive market would mean that they too would be able to benefit from the competitive prices, multiple choices and the innovations made by the suppliers.

Therefore, the reason for having antitrust laws is clear when considering the factors that can affect the market driven economy. Having such laws would make an economy more stable and consumer friendly in the long run.