Anti-trust law is a group of laws created for the sole purpose of regulating business practices. This is to make sure that there is free and fair competition in the market economy to benefit every player and consumer. An agribusiness anti-trust law is also a competition law that governs the operation of the business while protecting the clients from predatory and unfair trade practices. The statutes seek to offer equal playing levels to the same businesses running in the same field while preventing the companies from getting too much power and dominating others in the marketplace.
Reasons for having an agribusiness anti-trust law in place
The competition law is based on:
● Protect consumers
The monopoly of one company can potentially result in the exploitation of consumers. That’s because, without competition, the business can charge high prices or offer low-standard goods and services.
● Maintain competition
In an open market economy, promoting and sustaining a level of competition that keeps prices lower is important. This ensures the goods are of high quality, offers a range of varieties to consumers, and encourages innovation on the part of the producers and designers.
● Freedom of trade
If the anti-competitive activities become persistent in the market, they will act as an obstacle against new market entrants. Every country’s aim is to improve employment and productivity, and this only happens if there is freedom of trade. This means allowing other businesses to enter the market and giving them fair chances to build themselves.
● Preventing anti-competitive activities
agribusiness anti-trust law prevents other businesses from attaining unfair advantages over others via unjust means like bid-rigging and market allocations. These activities have a serious impact on competition.
The essential concepts of agribusiness anti-trust laws
● Market allocation
This is the agreement between competitors to split the market among themselves. In this plan, competing companies assign specific geographical territories and specific types of clients or products to themselves. For instance, business A could operate in the southwest, and business B would operate in the northwest. They will not breach each other’s territory and can avoid selling to or even charging unjust rates to clients on the other’s part.
● Bid rigging
It’s an illegal process that entails the collision of competing companies as to who can get the contract. The losing business would draft bids and allow the winning business to take the contract. This will be based on the condition that if business A wins the first time, business B will win the contract the next time. With these, the business will retain its market prices and shares.
● Price fixing
This is a notion where competitors decide to intentionally set the price of items and services after an in-house decision to make profits. They don’t allow the market forces of demand and supply to determine the price.
● Monopolies
This is the dominance of the whole sector or industry by one company or firm. Simply put, this is the exclusive control and possession of the supply of specific goods and services by a company called a monopoly. This happens in the form of an exclusive supply agreement, tying up an agreement where clients must buy two items together, predatory pricing, or a clear refusal by the company to do business with another company, hence lessening competition.
● Mergers and acquisitions
A merger is a combination of several companies, while an acquisition is where one company buys another. An agribusiness anti-trust law is in place to make sure any consolidation of businesses and assets doesn’t lead to market dominance, have an unfair impact on competition, or create obstacles for new business entrants.
We hope you now understand what anti-trust laws are. So, if you’ve been accused of agribusiness anti-trust violations, call an attorney instantly. The federal trade union, a private citizen, or the anti-trust division of the US dept of justice will initiate an anti-trust proceeding.