When
we reviewed the U.S. Antitrust laws in Credit Law class, especially the
Sherman, Clayton, Robinson-Patman and Federal Trade Commission Acts, it
reminded me of the many hours that were spent at my work place, reviewing customer
files and making computer system changes in order to better address compliance
issues with these Acts.
In
class we learned that antitrust laws have been around for a long time as the
Sherman Antitrust Act was created in 1890. This act prohibits conspiracy or
contracts among two or more persons in restraint of trade, in interstate
commerce or with foreign nations. Since this statue is so hard to regulate and
enforce, (per se violations), a "rule of reason test" was established. In essence,
the laws attempted to establish a level playing field for all sellers. The acts
outlined rules and regulations for commercial trade that prohibited exchanges
of pricing information, conspiracy in restraint of trade, price fixing and
group boycotting.
Several
years later, the Clayton Act was created in 1914. Its purpose was to correct
some errors and defects in the Sherman Act as well as supplement it. Among
other things, the Clayton Act prohibited the creation of monopolies by large
corporations aimed at deterring business from smaller companies or competitors.
In
1936, The Robinson-Patman Act further amended the Clayton Act to include price
discrimination practices that adversely affected free competitive enterprise,
to preserve competition in general, and to protect small businesses which
usually find it difficult to compete with larger competitors. Specifically,
price discrimination was defined in the Robinson-Patman Act as:
* Having
different prices for different purchasers
* Allowing
similar customers to have significant differences in terms and conditions of
sale
* Dealing
in preferential credit terms
In
addition to the Clayton Act, the Federal Trade Commission Act was passed in
1914. This Act was the broadest of all the antitrust statutes. It outlawed
all "unfair methods of competition in affecting Commerce, and unfair or deceptive
acts or practices in or affecting commerce." It also prohibited deceptive
business approaches that are designed to deceive the public.
Reflecting
back to my workplace experience of addressing compliance to these Antitrust
laws, I recall it was necessary to tackle this project in several phases.
First, we had to create customer groups such as an Industry, Main Line
Railroads, or Contractors, etc. Then, with the help of our IT Department, we
reviewed over 5000 customers, sorting them into their appropriate customer
groups. Finally, we had to establish the same terms and conditions, as well as
pricing for all customers within each group.
It
would be nice to report that this project resolved all issues but that is not
the case. Frequently we will have large customers set up with certain payment
terms, yet they try to ignore them and attempt to make us accept their Terms
and Conditions. Often this requires some negotiations with the client in
addition to an explanation that we are sensitive to antitrust laws which
prohibit offering various terms to the same type customers. It would seem, in
my opinion, the antitrust law regarding terms and conditions should be reviewed
and updated to match today's market.
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