Template:Antitrust - layman

Antitrust is the US term for laws regulating anti-competitive practices. Named for the US “trusts” that bought up and dominated the burgeoning US railroad networks in the late nineteenth century.

Laws are different in different jurisdictions, but the general thrust is to stop companies from deterring competition in a market. The common law is ideologically committed to Adam Smith’s “invisible hand”: if a market is free, it will work in everyone’s best interest and should not need a great regulation beyond the court’s sacred task of (i) enforcing the commitments merchants voluntarily make to one another in the course of commerce — contracts, in other words, and (ii) making up restitutionary, tortious and equitable principles as they go along — I mean, revealing immutable strands of righteousness hewn from the living jurisprudential rock of common law and equity).

Anyway, a company that has a monopoly, or a group that can act as if they have one, will tend to gouge its customers. Antitrust laws govern two types of anti-competitive behaviour: horizontal ones in restraint of trade, where firms that should be competing with each other form cartels, fix prices to undermine the beneficial effects of competition, and between them act like a single monopoly; and vertical, where companies abuse a dominant position they already have in a market to force terms/prices on its suppliers and customers and keep competitors out.

Competition regulators have powers to approve or prevent company mergers that would create a dominant position in a market and may require companies that have acquired a dominant position to break up. This hasn’t happened for a while, but the regulators have a newfound energy for intervening in things, and we might expect them to, er, de-fang a few tech companies if they get too big for their boots.