Implementation of the Sherman Act in the English Law - Coursework Example

USA Antitrust Law Customer Inserts Name Customer Inserts Tutor’s Name Name of the Institution 16th December, 2009 Abstract The English law implemented the Sherman act in 1980 with the aim of protecting business units from unlawful competition as well as well as the welfare of consumers. Since the act was signed into law several business units have been able to gain the attention that they require from their clients and hence experiencing substantial growth. The government considered this as a move that will foster economic growth as every individual desiring to venture into business is protected from forceful competition. The government appreciates the measures and efforts that may be employed by businesses to increase its sales. It however maintains that the practice has to be done in a lawful manner for the benefit of all. Introduction The Sherman act was named after senator john Sherman who was its author. The legislation was formulated in April of the year nineteen eighty and enacted into a binding law on June of the year nineteen eighty by President Harrison. The law was mainly enacted due to the need of protecting business units and organisations against competition. The law has been viewed differently by people who view it a strategy to prevent the emergence of other competitive business units. The law was passed to protect business entities that would be subject to harm if other such units were established (California, 78). During the initial period of its passage, it was mainly to encourage the establishment of monopolistic units and cartels. The law was also to protect consumers by preventing units from artificially raising the prices of goods by limiting their supply. There are various sections of the law address the various issues that arise in case of competition and manipulation of consumers or other business units. Howard Tool Company The situation that is being faced by the Howard tool company in their efforts to get customers can be referred to the Sherman law. Looking at the quality of their drilling wells and the fact that they had obtained a patent for their manufacturing activities guarantees them the right to seek the intervention of the court concerning the matter. The other five companies entered into an arrangement that was meant to keep Howard out of the picture and have most of the customers. The company has done all that it can to ensure that its clients are access to quality drilling machines. The other companies seem to be uncomfortable with the same and hence doing all that they can to keep not only Howard but also other emerging companies. The case could be justifiable if the companies did not employ means of reducing the prices of their products basically to keep their emerging competitors out of scene. Once the competitors were out, they would raise the prices. This is a procedure that can be related to the exploitation of consumers and also competing Howard company which is basically punishable under the law. Consumers are manipulated in a way that they have to adjust to the changes in prices which are not necessarily due to production expenses but because they want to keep other competitors out of the market. The purpose of the five companies merging together is also basically for the purpose of denying Howard Company its market share (Clabault, 38-41). These are enough allegations that can make the company to file a suit against the five companies. Howard Company deserves to receive a greater market share considering the fact that they produce equipments of higher quality than the other companies. They can easily seek legal protection since they have a patent licence. When the law is applied to the case it is realized that the five companies in their efforts to minimize on the rate of competition, they are unfairly competing with Howard and other emerging companies, which in turn are affecting consumers. It has also been reported that they are infringing the patent rights of Howard Company by duplicating their design for them to attract consumers. This is something that should worry the company as the trend may prove disastrous to its business. This is a violation of section 2 of the Sherman act that prohibits individuals or business organizations from entering into deals that will prove to monopolize their business undertakings and thus hindering other companies from penetrating the market. According to this section, the five companies will be charged of committing felony by the court. Section 2 of the violation act has two elements that define instances in which a person or organization may be found guilty of the violations. These elements are taking the power of monopoly in whichever form in a given market and maintaining the power in the subsequent market by force which is likely to hinder the growth of the market or other superior products in the market. Looking at the above elements, it is clear that the five companies forcefully took monopoly of the market by merging their products to ensure that Howard which had superior qualities does not penetrate the market. They also increased and reduced prices whenever a new company with similar products surfaced just to prevent them from gaining popularity. This is also viewed as a strategy that hindered the growth of the economy in two ways. First, consumers were forced to buy products of lower quality when they had the ability to buy better ones from Howard Company, and secondly they were manipulating consumers and other companies by adjusting their prices to win consumers. In a similar case that involved Standard Oil Co. of New Jersey v. United States, the oil company was found guilty of taking monopoly in the state by establishing other outlets. The company wanted to enjoy a monopoly of sales by ensuring that it has other smaller units all over. This was considered as a measure that was meant to keep other similar companies out of the market as they could not manage the competition. Even though business units are allowed to employ whichever means to ensure that they experience growth, the procedure should not be done at the expense of hindering growth among other companies and the consumers. The quick move that was employed by the oil company to establish other units was observed to compromise on the quality of the oil that was being supplied to consumers and thus found to violate the provisions in section 2. According to the court ruling, it was identified that restraint of trade in this case would mean an activity that is carried out by business organizations to boost their businesses. In this context it was found that in the effort of the oil company to gain monopoly by setting up other units, the company reduced its output, produced products, of law quality and increased the prices of the products (Bessette, 54). The court found the company to have gone beyond the limitations of the requirements in section 2 which was also against the rule of reason. The contract that the oil company was operating on was against the Sherman act as it restrained other companies from venturing into the trade and also causing harm to other consumers. Similarly the five companies violated the act by behaving in a way that suggested that they were the only ones to enjoy business. The rule of reason is an application that is used in determining whether the requirements of section 1 have been violated or not. The court appreciates the fact that there some legal and business considerations that were observed in setting up a certain establishment. The court will thus consider all this factors to determine weather the court will turn out in favor of the plaintiff or not. In determining the fate of Howard Company, the court will justify the fact that the other companies have violated the rule of law considering historic events and the economic value of the same. Howard was engaging in legal business considering that it had patented it. Their products were also considered to be of high quality due its durability. The other companies did not employ the right competitive means such as improving the quality of their products but instead merged to keep the company out of the scene. Independent companies that reduced their production to experiment on cone drills revealed that they wanted to apply similar technology to increase their productivity. Howard company had done all that it could to ensure that its business was done in a straight and upright way (Kintner, 88-90). The other companies however employed all possible means to ensure that the company does not enjoy business as it should enjoy. Howard Company is more equipped for its manufacturing purposes compared to other companies. It is therefore illegal for another similar company that does not guarantee the safety of its clients to take up the market at its expense. The court should therefore make a ruling that will guarantee the company maximum protection from such unlawful competition. The other companies should be made to adhere to certain rules that will put them under check so that they don’t violate commercial laws of other companies and offer quality services to their clients. Orange 100 The manufactures of orange 100 are found in the dilemma of wanting to venture into one line of distribution in order to maximize their sales in the market. They realized that there could be a big difference in the revenue which could arise from the products sales. One is in a competitive field yet generating the company a higher income while the other is less competitive even though it is equally important. The company may have considered the amount of profit it would gain by concentrating on one production line. Considering that the line of production that they are considering to remove from the market is important and in fact considered as the best quality, makes the company not to easily stop such production. If the company indefinitely stops selling the product for photographic purposes, then its clients may raise concerns and thus putting them into trouble. It may also not be legally right for the company to inconvenience other clients in its efforts to earn bigger profit in a different production line. According to section 2 of the Sherman act, a business organization is not allowed to venture into an activity that would threaten other commercial establishments or hinder the economic growth of the people by inconveniencing consumers. If the company looks for a genuine reason that would justify them from not using their products for photography, they would be in convincing their clients that have trusted their products for the work of photography (California, 82). This may make the clients to look for other alternative means for their photography work which may not guarantee them perfect results as the previous product. By venturing into one line of production when in the real sense they have an alternative, they will also be a threat to the manufactures of products X, Y, Z and the rest. The company already enjoys eighty percent of the market advantage and monopolizing its business may keep the other companies completely out of the market. Sherman act chapter two violation was also justified. The lawful thing that the company needs to do is to maintain the production of the two products and probably increase the prices that are charged on the product as it is used in photography. Since the company has discovered that it enjoys monopoly in both products, and it wants to take advantage of the monopoly to make more money without having to violet the rights in section 2 of the Sherman act. Increasing the price of the dye as it is used in photography, will prove to the company how loyal the consumers are to its product or if they prefer it basically because of its stable price. This will be reflected on the purchasing power of the consumers where by they will either retain their purchasing power or go for other cheaper qualities. Depending on the overall percentage of such response, the company will be guided in arriving at a considerable decision. If the production rate of Dyco Company was slightly lower than that of product X, Y and Z, the market analysis would have been different. It would basically mean that the company has a lesser operation capital which would be reflected on the price of the products. The company is already enjoying a considerable market share despite the fact that its production and distribution rate is similar to that of products X, Y and Z. If the Dyco Company reduces the market price of its products, the other products may not have a place in the market. Orange 100 products may displace the other products in the market which may basically put them out of the scene. Looking at the situation in the view of the Sherman act, the company will not be found to violet its laws. According to section 2 of the Sherman act, a company will be found guilty of violating the law if it takes up monopoly in the market and also engages in activities and conducts that will make them to have the power to influence their trade activities that will hinder other companies from having a share and at the same time having a negative impact on the consumers. Looking at the situation critically, it may be said that the company is trying to gain monopoly of the market by reducing their prices. Even though the company will ultimately gain the monopoly in the market, which is not the intention of its price reduction. The company may decide to lower the price because its production rate is lower. In fact reducing the prices would be the fairest thing for the company to do which will in fact relieve their consumers. Considering the second part of section 2 of the act, the company has not been involved in conducts that forcefully takes control of the market (Clabault, 72). Their will be a reduction in the prices to bring balance considering their lower production rate. The company may also decide to expand its area of distribution to take advantage of a wider market. This may basically threaten the companies of products X, Y and Z. who may want to seek legal intervention. The court will look at the factors that have basically led to the occurrence of the situation to ensure justice is exercised. The court will need to justify whether the rule of reason has been violated. In doing this the court will look at the historical factors and also to the undertakings that are influencing growth. In this case it will find that the company has been performing well prior to its reduced price. It had gained preference from its consumers most of whom were purchasing the products (Irons, 123). Their products are also preferred due to its high quality and not because of any manipulative means that it could be using to get consumers their way. Basically it can be said that the company has been genuinely carrying out is business practices which could be the reason why it has gained advantage over the others. The company may either reduce the prices of its products or expand its area of distribution due to the lower production expenses which will in turn make them to have higher percentage of sales. According to the rule of reason, this will be considered to be a measure that will promote growth and positively impact on consumers. They will have the opportunity of buying more of the orange 100 product to increase their productivity which is a measure that will positively impact on the growth. The other companies may not have a genuine reason to prosecute the company because it will not be found guilty of the offence. Their decision to take the company to the court will not be genuine and probably inspired by their lack of performance (Hall, 51-56). The court in its ruling has the responsibility to ensure that the allegations brought against an individual or organization are true and backed up with evidence. It is not to sympathize with individuals that have been able to genuinely perform their responsibility to win clients their way. Companies X, Y and Z are instead required to put in more effort so that they produce goods of high quality. Even though the steps that will be taken by the company will be for their disadvantage, the company did not take them with the main purpose of kicking them out the market but to maximize the attention that their products are receiving. Considering the above case, it can genuinely be said that Dyco has taken the power of monopoly in the market. This is true considering the two products that they are engaging in which are equally performing well in the market. With a similar production and distribution rate as other companies, the company is enjoying a high percentage of the market share which can be considered to be a threat to the other company. Whatever step that the company may decide to take, it will be advantageous to them which will in turn make them have more monopolistic power. The company could be looking for means of gaining more monopolistic power over the other products X, Y and Z. This is a measure that is being taken considering the competitive market in that particular line of product. The same product is also preferred for photography but the market in that line is not competitive and thus considering dropping it. This may however not be possible because the product is also of economic value. The company is therefore having monopoly power over the other company. Sweet Company Sweet company has been accused of violating the various sections of the Sherman act by joining together with other rival companies to raise the prices of their products. Considering the various suits that have been brought against the company by individual consumers and other companies for alleged violations, the court will rule the cases according to the available evidences. There need to be evidences that prove that the company influenced the purchasing power of its clients by increasing the prices of their products. The company has been enjoying a good sales return from other food manufacture which generally means that their products have been of high quality. It should be noted that the other allegations that followed were reached at after the antitrust division secured criminal charges against them. This means that, until the antitrust department found that the company was wrong, the other manufactures and consumers were okay with the price. According to the Sherman act, a business organization will be found to be in violation of the antitrust law if it engages in activities that manipulate consumers, hinders the growth of other business units and forcefully takes monopoly of the market. Unless there is sufficient evidence by the alleging parties that will actually prove that the sweet company engage in such activities, the company will be freed from such allegations. Before the suit was presented to court, the company was enjoying good sales turnover especially from the manufactures of juices and other sweets. There was no recorded complain from the aforesaid companies or even consumers on the high prices of the company (Bessette, 62). All along, the manufactures and consumers have been enjoying the services of sweet company until after a suit was charged against it. This basically means that even though the prices of the products were high, the quality was good and that is why their clients had no issues with the price. The circumstances that followed the allegations by the government and the action of the company to agree to pay a fine may have influenced other companies and consumers to also file suits against them. Everything was going well on their side because the company had admitted the allegations that were passed against it by the government. This will therefore not be considered as the right action and it could only be so if the allegations were filed against the company prior to the suit filed by the government. The other consumers and manufactures may feeling the pain of not realizing earlier that the prices had been indefinitely gone up, this can however not be blamed on the company because they may have done so with a good motive. The evidence of this is that the manufactures and other consumers did not resolve to alternative products because they appreciated the fact that the prices had gone high due the maintained good quality. The court in its ruling should find the company not guilty of the allegations because it did not violate the sections of the Sherman act. There was no evidence that the company conspired to raise the prices of the products, secondly it did not in any way hinder the growth of other companies or negatively affecting the consumers. The company did not compromise on the quality of goods that it produced as its sales were not affected. The other allegations are therefore baseless and were birthed out of influence. The allegations could only be genuine if they were filed before the government filed its suit against the company or if there were any complains earlier on concerning high prices and or poor quality. Californian farmers A suit has been filed against farmers and the refiners for coming together and agreeing on the prices they will buy and sell the bits and refined products. Looking at this in the view of the Sherman act, the refiners rather than the farmers should be found guilty of the offence. The farmers may have considered negotiations with the refiners because they were afraid of the impact that it will have on their farming activities. Considering that their suppliers are small scale farmers, and that the amount they get is to cater for their families and also aid their farming activities, they did not deserve to be manipulated. The refiners may have decided to buy the beets at lower rates and sell the products at higher rates (Hall, 63-67). This is an agreement that they agreed upon which had negative implications on the farmers that were wholly depending on them. According to the Sherman act, the refiners acted in a way to signify to the court that they wanted to gain an advantage over the farmers and other companies by changing their prices. The refiners were found to violate the law under section 2 of the Sherman act because they attempted to hinder the growth of the farmers and also to forcefully gain monopoly over the other rival refiners. The refiners manipulated the small scale farmers that worked hard in their farm; they had no alternative but to negotiate with them so that they get a fair deal. The court should therefore take stern measures against the refiners to prevent them from using unlawful means that would undermine the farming activities of their main suppliers. Their aim of coming together to address the price issue was probably done to gain an advantage over their competitors. The farmers should however be relieved of their charges because their action was due to the influence and pressure that was mounted on them by the refiners. Lever The company that is involved in the supply of the lever and tide newspapers has found a way of promoting their sales and probably gaining a market advantage over the time newspapers. Their action can hence be qualified to be a violation of the Sherman law. It can basically be said that the company is forcing its advertisers to buy space in the tide magazine which could be against their will. This will in turn influence them to buy both the morning and evening newspapers from the same company. This can also be viewed as a strategy that is being employed by the company to increase its sales at the expense of time newspapers. They want to make sure that the people that buy the lever newspaper which is basically the main morning newspapers also buy the tide newspaper. There is therefore a high probability that the people that are buying the tide magazine are doing so forcefully rather than willfully. The company will therefore be found guilty under the Sherman law for violating the sections of the act. According to the Sherman act, a business organization that forcefully takes monopoly by engaging in activities that will hinder other organizations from growing shall be found guilty. Accordingly, the company will be found guilty of forcefully taking monopoly and maintaining it by making the advertisers that advertise in their morning newspaper to also advertise in their evening newspapers. This is an action that directly hinders its advertisers in the morning newspaper from advertising in the time newspaper (Kintner, 56). Despite the efforts of the time magazine to probably market their newspaper, they may not be able to win clients especially those that advertise in the lever newspaper. This is a strategy that automatically gives them a monopolistic advantage over the company that produces the time magazine. The company will also be found guilty of violating the rule of reason because they are generally hindering the growth of the company that produces the time magazine. The reason why they want their advertisers to also advertise in their evening newspaper is for them to forcefully posses them to be their clients. They want to block all the means possible that would probably make them to advertise in the time magazine. They are also manipulating their advertisers who have to buy two spaces in two newspapers. The lever company may be taking advantage of the fact that they are the main suppliers of the morning newspaper and hence in a better position to control their clients. Their morning newspaper sells more than their evening newspaper because of the monopoly that they already have. They are using such a strategy to ensure that the other company is completely out of the market. The court in its ruling will find the company guilty of the offense and will therefore have to pay the penalty of causing harm to both the time company and the consumers. Stringent standards should be put into place against the organization to prevent them from forcefully gaining monopolistic power against the time company. Conclusion From the cases above it is clear that the court looks at the various conditions that surround an allegation before reaching a conclusion. The court will not literally look at the allegations and pass its judgment without first having to consider the historical and developmental issues that surround the allegations. Both sections of the Sherman act have to be critically observed and the various issues critically studied before a prosecution decision is reached at (Irons, 150). The aim of the act is to ensure that business units engage into activities that will not only be profitable to them but also fair to their consumers and other business units that engage in similar activities. There may however arise some challenging cases like the one involving the sweet company above, which is the reason why the court will look at the historical happenings that followed the allegations to come up with a fair ruling. References Bessette, Joseph, American justice, Volume 3: Virginia, Salem Press, 1996. Clabault, James, Sherman act indictments, 1955-1965: a legal and economic analysis: California, Federal Legal Publications, 1968. Hall, Kermit. Guide to USA Supreme Court decisions. Oxford University Press, 2001. Irons, Peter, A people's history of the Supreme Court: the men and women whose cases and decisions have shaped our Constitution: New York, Penguin Books, 2006. Kintner, Earl, Practices prohibited by the Sherman act: North America, Anderson Publishers, Company, 1980. Read More