Fair Business Practices: Why Do We Need It?

1016 words - 5 pages

The United States has an abundance of fair practices laws that intend to make things fair, yet competitive. I feel that these laws are absolutely effective in helping to balance our country. Fair practices in business protect the businesses as well as the consumers in many ways including: monopolization protection, conspiring to fix pricing or allocate customers, price gouging, and many other important protections (SBA, 2013).
In 1890 Congress passed the Sherman act with their first attempt at protecting businesses and consumers (FTC, 2008). This act was to touch down on monopolization and unreasonable trade. In order to protect consumers and businesses it was decided that monopolization; or the practice of controlling a single market, was an unfair act. Not only do monopolies have the ability to play with prices, but they can also decrease the quality of their products (Amadeo, 2013). For the consumer it could be unfortunate if, for example, the only supply of baby formula is controlled by a single company and the price increased by 40% after competition has been knocked out.
In some instances however, monopolies could be good and they are not actually illegal in the United States. A monopoly can be good if they are using their power to consistently deliver a product or service. In cases such as electric and water, where the cost is extremely high to supply them, they are controlled by the government which protects the consumer from high prices. The government controls the prices that they set and allows them to recoup and obtain a reasonable profit for their services and products (Amadeo, 2013). In this way it shows that monopolies are not illegal, but they are tightly controlled under the Sherman Anti-Trust Act.
In 1914, yet another important act was passed and dubbed the Federal Trade Commission Act. This act was intended to tackle unfair competition and deceptive practices. The Supreme Court combined the two acts and stated that any business violating the Sherman Act would be subsequently violating the FTC Act. They went even further to establish that it would reach any practice that harmed competition but did not fit under the Sherman Act.
Unfair competition can destroy businesses by applying favorable conditions to some rather than others. Some things that are considered exclusively under the FTC Act include patent infringement and publication of false representations (Cornell University, 2010). Essentially anything that is aimed at harming competition is considered unfair, but in my opinion this law doesn’t cover it all. It is becoming increasingly common to see advertisements stating that the competition is poor and you should choose them because you don’t want high prices and inferior service. Overall, many acts of unfair competition are completely legal and the law generally only covers acts that are in a more fraudulent nature.
Another act of the anti-trust laws was also passed in 1914, the Clayton Act, which addresses what the...

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