Antitrust laws protect consumers and promote competition between companies. Lawsuits can be brought against companies engaging in unfair practices, forming cartels, dominating markets, or engaging in anti-competitive mergers and acquisitions. Microsoft faced antitrust lawsuits for bundling software and overcharging customers.
Antitrust laws are created to protect consumers. The concept behind antitrust laws is that having competition between companies is a good thing for consumers. An antitrust lawsuit can be brought when a company is accused of having engaged in unfair commercial practices.
Another situation where an antitrust lawsuit could be considered is when a group of companies come together as a cartel to try to manipulate the market in their favor. A cartel is formed by companies that normally compete with each other for their own gains. Members can agree to fix prices, limit production or allocate certain territorial regions to certain companies. The cartel’s objective is to reduce competition and increase its members’ profits.
An antitrust action can be brought when a corporate entity, government agency or member of the public believes that a company is unfairly restricting free trade by dominating a particular market. The plaintiff in Microsoft’s antitrust suit alleged that the company used its position as a market leader to undermine its competition. The company already had a large market share. By offering bundled software in a bundle, other companies have not had the opportunity to offer consumers alternatives to Microsoft products.
Microsoft’s practice of offering additional features to purchasers of its operating systems without charging customers was challenged in the legal action. The antitrust lawsuit also alleged that when Microsoft offered Internet Explorer browser software with the Windows operating system, the company was behaving unethically. The lawsuit claimed that when products were offered together, consumers were not given the opportunity to choose which browser they wanted to use. Other companies that normally competed in this market were unfairly excluded as a result of Microsoft’s actions.
Another antitrust lawsuit was filed against Microsoft as a class action by members of the public. They claimed that Microsoft overcharged its customers when they bought Internet Explorer and 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 action alleging unfair business practices. When two companies come together, the resulting organization cannot mean less competition in the market. Less competition can lead to higher prices, as well as a reduction in the quality of goods or services the consumer receives. There are antitrust laws to ensure that this scenario does not occur.
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