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What are antitrust laws?

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Quick Answer

American antitrust laws refer to three core laws passed by Congress in 1890 and 1914 to preserve competition in free enterprise, according to the Federal Trade Commission. Other acts passed in 1936 and 1976 amended the three basic antitrust laws.

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Full Answer

The Sherman Act of 1890 prohibits unreasonable restraints of trade, monopolies and conspiracies to restrict trade. The Sherman Act forbids price fixing, rigged bids and divide markets among companies. Violators of the Sherman Act face up to 10 years in federal prison, $1 million in individual fines and $100 million in corporate fines, according to the FTC.

The Federal Trade Commission Act of 1914 bans unfair practices and deceptive acts such as false advertising. This Act also created the Federal Trade Commission, an agency that oversees the enforcement, regulation and implementation of federal antitrust laws, according to the FTC's official website.

The Clayton Act of 1914 further specifies illegal activities with regards to corporations. For instance, the same person cannot make business decisions for competing companies. This act was amended in 1936 to ban discriminatory practices among firms. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires companies to notify the U.S. government in advance when a major merger or acquisition is planned, notes the FTC. The 1976 legislation also enables parties to sue for triple the damages if a firm is adjudged to have violated the Sherman or Clayton Acts.

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