Antitrust laws are put in place to protect consumers. The underlying concept behind antitrust laws is that having competition between companies is a good thing for consumers. An antitrust lawsuit can be started when a company is alleged to have engaged in unfair business practices.
Another situation where an antitrust lawsuit could be considered is when a group of companies comes together as a cartel to attempt to manipulate the market in their favor. A cartel is formed by a companies that would normally be competing against each other for their own gain. The members may agree to fix pricing, limit production, or allocate certain territorial regions to certain companies. The goal of the cartel is to reduce competition and increase profits for its members.
An antitrust lawsuit may be started when a corporate entity, government body or member of the public believes that a company is unfairly restricting free trade by dominating a particular market. The Microsoft antitrust lawsuit’s plaintiff alleged that the company used its position as a market leader to hurt its competition. The company had a large market share already. By offering software packages in a bundle, other companies didn’t have the opportunity to offer consumers alternatives to Microsoft products.
Microsoft’s practice of offering additional features to buyers of its operating systems without charging customers for them was questioned in the legal action. The antitrust lawsuit also alleged that when Microsoft offered Internet Explorer browser software with its Windows operating system, the company was behaving unethically. The lawsuit alleged that when the products were offered together that consumers were not given the opportunity to choose which browser they wanted to use. Other companies who would normally compete in this market were unfairly shut out as a result of Microsoft’s actions.
Another antitrust lawsuit was brought against Microsoft as a class action by members of the public. They alleged that Microsoft overcharged its customers when they bought Internet Explorer and the Windows software packages together. This legal action is an example of an allegation that lack of competition drives up prices for consumer goods.
Mergers and acquisitions can also be the subject of legal actions alleging unfair business practices. When two companies join together, the resulting organization cannot mean less competition in the marketplace. Less competition could lead to higher prices, as well as a reduction in the quality of goods or services the consumer receives. Antitrust laws are in place to ensure that this scenario doesn’t take place.