Antitrust Practices and Market Power - Essay Example

Antitrust Practices Affiliation: Business operations are undertaken within and across markets and industries that are highly characterized by competition. Firms in these markets and industries formulate and implement competition strategies, the ultimate objective being to outperform competitors. Notably, this process has to be fair and in line with the legal framework that monitors and regulates competition. The idea is to minimize or alleviate antitrust or anticompetitive behavior among firms (Posner, 2001).

A recent antitrust investigation case involved Google, where it was accused of monopolizing and posing entry barriers in the search engine business and online advertising (Alden, 2013).The antitrust investigation against Google by Federal Trade Commission (FTC) followed complaints from competing search engines. They claimed that Google had monopolized the search business and online advertising, making it difficult for them to compete. Other search engine claimed that Google had made it hard for new entrants to find their way into the markets and industries that Google had already established operations.

The Federal Trade Commission, which prohibits unfair methods of competition and deceptive practices (Areeda & Hovenkamp, 2011), came in to investigate Google’s antitrust behavior.Although FTC finally closed the investigation against Google without filling any lawsuits, antitrust behavior comes at a cost to the company. Google had to prove its case that it was not engaging in antitrust practices. This drew company resources into the investigation, resources that could have been directed to other company developments.

Most importantly, unfair and illegal business activities often taint company image and consumer loyalty. This could eventually mark a devastating turning point for the company.Investigation into Google’s antitrust behavior was undertaken within the relevant legal framework. The applicable legal provisions included the Sherman Act (1890), Clayton Act (1914), and Federal Trade Commission Act (1914) (Posner, 2001). Under the Sherman Act, Google was investigated for the monopolization claims by other search engines.

In the light of Clayton Act, the company’s exclusive dealings were put on the spot. Finally, the FTC Act encompasses unfair and anticompetitive practices for which Google was being investigated.Perfect competition, monopoly, and oligopoly market structures influence competition differently (Federico, 2009). These market structures determine whether or not there are barriers to entry into any given market depending on the structure in question. Although Google operates alongside other search engines, its dominance cannot be ignored.

Notably, this dominance is strategic as opposed to antitrust or anticompetitive behavior. Regardless of the market structure within which firms operate, there are positive and negative implications.Monopolies are price makers, and they maximize their profits where marginal cost equals marginal revenue (Federico, 2009). On the other hand, oligopolies exhibit market power but they often collude in their operations. The inefficiencies associated with monopolies and oligopolies present the as bad for society.

However, government monopolies have been deemed good for society due to the underlying government monitoring and regulation. For instance, monopolization of public transport fixes prices so that commuters will pay the same rate during peak and off peak hours. In contrast, natural monopolies practice price discrimination.ReferencesAlden, W. (2013). “Google’s Antitrust Victory”. The New York Times, January 4, 2013: http://dealbook.nytimes.com/2013/01/04/googles-antitrust-victory/Areeda, P.

& Hovenkamp, H. (2011). Fundamentals of Antitrust Law. New York: Aspen Publishers Online.Federico, E. (2009). Endogenous Market Structures and the Macroeconomy. New York: Springer.Posner, R. (2001). Antitrust Law. Chicago: University of Chicago Press.