The Supremes' Greatest Hits, Revised & Updated Edition by Michael G. Trachtman

Author:Michael G. Trachtman
Language: eng
Format: epub
Publisher: Sterling

Price Fixing and “Per Se” Violations

Ever creative, companies in the early 1900s pursued another activity that allowed them to raise prices without creating monopolies: price fixing agreements. The leaders of competing companies in an industry would simply agree among themselves to maintain prices at an agreed-upon level, rather than trying to undercut one another. The usual effects of competition would be blunted, and the consumer would suffer.

Building on the Standard Oil precedent, in 1927, in the case of United States v. Trenton Potteries Co., the Supreme Court ruled that price fixing agreements among competitors are by definition an unreasonable restraint of trade, whether or not the levels at which prices were fixed were or were not reasonable. This became known as a “per se” violation of the antitrust laws, meaning that simply doing it is against the law, without regard for any “rule of reason.” In the intervening decades, various other forms of collusion among ostensible competitors have been identified as per se violations as well.

Antitrust law has evolved into a huge body of court decisions, statutes, and regulations that permit both enforcement actions by the government and suits by private citizens and companies for antitrust violations. Scholarly debates among economists and politicians pertaining to the economic policies that should underlie the enforcement of the antitrust laws are ongoing, leading to different approaches taken by different administrations and different courts at different times. But when all is said and done, in the Standard Oil case the Supreme Court set forth the basics of some of the most important rules by which corporate America must live.

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