Fair Business Practices: Advertising and Pricing

Unfair Pricing Practices
When you think of the Sherman Antitrust Act you usually think of big corporations taking advantage of small businesses, but antitrust laws apply to businesses of all sizes. Antitrust laws are designed to protect the consumer from any conspiracy to tamper with the natural flow of trade in the market.

Price fixing is when two or more parties agree to manipulate the prices offered to the public. This can be done vertically or horizontally. An example of vertical price fixing would be if your wholesale business would only sell to retailers who adopted your price structure. An example of horizontal price fixing would be if you made an agreement with a competitor to set a minimum price for a product. That price would undoubtedly be higher than it would be in a free market, so it would be unfair to the consumer.

Price discrimination, which is selling goods at different prices to different businesses to restrain competition, is also illegal. So is making agreements to divide up customers or markets between competitors or to boycott another competitor or supplier. One business cannot also acquire all of its competitors to control a given market. This is called monopolization. All of these are violations of antitrust laws.

If your business is found to have violated antitrust laws, you could face hefty civil fines and criminal prosecution. As an individual, you could be fined up to $1 million criminally and receive up to 10 years in prison.