Question

Why is Antitrust activity so harmful to consumers and the economy? What, if anything, can consumers, competitors, or or the government due to prevent or detect this activity?

Answer 1

Answer:-

Before Understanding the Antitrust Activity let us understand what is "Antitrust law" this will give you true picture of antitrust activites and how they are harmful to consumers.

Antitrust laws, also referred to as "competition laws," are statutes developed by the U.S. Government to protect consumers from predatory business practices by ensuring that fair competition exists in an open-market.economy.

Some of Antitrust Activites are :- Causing un fair competition in economy using following activites

1.Market Allocation

2.Bid Rigging

3.Price Fixing

4.Monopolies

5.Mergers and Acquisitions.

In short, They prohibit a variety of practices that restrain trade. Examples of illegal practices are price-fixing conspiracies, corporate mergers likely to reduce the competitive vigor of particular markets, and predatory acts designed to achieve or maintain monopoly power.

All such activities will eliminated healthy competition out of the market and will give rise to unsatisfactory prices, price discriminations , excess increase in prices over a period of time, creation of monopoly.

this will affect the consumer badly and create a disturbed trade environment in the country.

2.How to prevent or detect these activites ?

Answer:-

FEMA and state and local government agencies with whom FEMA is coordinating begin to solicit competitive bids for rebuilding contracts, the Antitrust Division is prepared to provide assistance to these agencies to protect against bid rigging, price fixing and other collusive conduct among companies competing for rebuilding contracts.

Price fixing, bid rigging, and other collusive agreements can be established either by direct evidence, such as the testimony of a participant, or by circumstantial evidence, such as suspicious bid patterns, travel and expense reports, telephone records, and business diary entries.

If a Consumer . Competitior or Government have these kind of evidence in possession with them , they can deliver these to FEMA and state and local government agencies to prevent such antitrust activites .

Now Let us understand how to detect them:-

1. Market Allocation :-

In this scheme, co-conspirators agree to divide up customers or geographic areas. The result is that the coconspirators will not bid or will submit only complementary bids when a solicitation for bids is made by a customer or in an area not assigned to them. This scheme is most commonly found in the service sector and may involve quoted prices for services as opposed to bids.

2. Bid Rigging:-

In this type of scheme, one or more competitors agree not to bid, or withdraw a previously submitted bid, so that a designated bidder will win. In return, the non-bidder may receive a subcontract or payoff.

3. Price Fixing:-

Price Fixing impacts procurement when business is conducted through purchase order or direct purchase. In this situation, competitors may agree to raise or fix prices they will charge for their goods or services, set a minimum price that they will not sell below, or reduce or eliminate discounts.

Suspicious Indicators:

• Look for situations where competitors always announce their price increases at the same time for the same amount or have staggered price increases with some pattern, such as appearing to take turns going first.
• Look for competitors reducing or eliminating discounts at about the same time.
• Generally, be alert to situations in which all prices seem to be uniform and all suppliers refuse to negotiate those prices.

4. Monopolies :-

Suspicious Indicators:

• Look for situations in which the some company seems to get in contract for creation of monopoly market to get higher benefit by dominating market , using price discrimination approch, higher price charging and other unfair practices.

REPORT YOUR SUSPICIONS

FEMA AND LOCAL GOVERNMENT AGENCIES, encourage all agents, auditors, and procurement officials to report suspicions of collusion through appropriate channels in your organization. Your observations may add to information they already have about an industry or, together with other reports, indicate a more widespread problem. Your call will always be appreciated and treated in accordance with our confidentiality policy, and, when warranted, they will conduct an investigation.