What Law Does Price-Fixing Violate?
What law does price-fixing infringe? It could be the Sherman Act or the False Claims Act. Other laws could also be applicable, such as The Donnelly Act. These laws will be covered in this article. We will then discuss the underlying issues that make price fixing illegal. First, let’s define price-fixing.
In order to be a per se violation of the Sherman Act, price-fixing must be conducted with an intent to obstruct competition. This type of restraint can be caused by a contract, conspiracy, or agreement between companies. In addition to obstructing competition, it also violates antitrust laws. In order to be a per se violation, the defendants must also commit other acts that are prohibited by the Act.
Antitrust violations are prosecuted by the U.S. Department of Justice. The Federal Trade Commission handles civil cases. Many state attorneys general also bring cases. There are also antitrust offices in many states. In addition to antitrust laws, the federal government can bring civil suits against businesses that commit price-fixing and other violations of the Sherman Act. A private individual may be eligible for treble damages depending on the type and extent of antitrust violations.
False Claims Act
If the False Claims Act is violated, a company could be liable to treble damages and a civil penality. A company can be held responsible for a false claim under the False Claims Act if it violates the law by its reckless disregard or deliberate ignorance. Congress removed provisions in 1986 that made the Act less effective, including the “government possession of information” bar to qui tam lawsuits. The whistleblower doesn’t need to prove specific intent in order to succeed. Instead, they can be found guilty of violating the Act by a preponderance.
The Anti-Kickback Statute bans companies from paying kickbacks to arrange purchases and sales in return for receiving government payments. This statute protects the public by ensuring proper financial incentives don’t compromise health care. The False Claims Act, on the other hand, protects the public from anticompetitive conduct by ensuring that those harmed by price-fixing are properly compensated.
Vertical price-fixing in New York is a per se violation to the Donnelly Act. This includes the use of a dealer-induced, RPM arrangement. Dr. Miles held that vertical price-fixing was per se illegal under the Fair Trade Law, the state’s courts rejected this argument in the state’s antitrust court cases. New York legislation was passed that prohibited price-fixing between a seller or a supplier in vertical contracts. This law also outlawed any illegality that could undermine a price fixing vertical contract.
The proposed Donnelly Act Amendments include language to expand the definition of monopolization to include any “concerted activity” between two or three businesses. “Concerted action” would be defined by the phrase “contract combination, agreement, conspiracy”. These changes could also impact the burden of proof requirements under law, especially when it comes to establishing monopoly power for a firm.
Restrictive Trade Practices Act
The Sherman Act forbids price-fixing, conspiring, and trust combination. To be in violation, two or more companies must agree on a price that is unreasonable and unfair to the competition. Price-fixing is also prohibited when firms offer lower prices than competitors but fail to document the lower price. While some companies can claim price-fixing is acceptable, other companies do not have to follow the law.
Donnelly Act also prohibits boycotts and tying arrangements. For corporations, civil penalties of $1 million and for individuals of $100,000 can be imposed for violations of this law. Private parties can also file lawsuits to stop illegal practices. The plaintiffs can seek treble damages if the company is found guilty of violating the Act. Price-fixing is a felony, punishable by up to four years in prison.