Small Business Practices To Avoid

Article by¬† Pierre Zarokian CLAIM: What Small Businesses Need to Know About Unfair Business Practices and Anti-trust Laws Small businesses often face stiff competition from larger businesses, and as a result they may resort to strategies that they think will help their business improve its performance. Occasionally, because of a lack of understanding of federal laws, these strategies inadvertently violate federal antitrust laws. By not knowing what business practices are considered unfair by antitrust laws, small businesses are leaving themselves open to serious federal charges and a loss of their business. This article is intended to help small businesses understand the basics of antitrust laws so that they know what business practices and strategies to avoid in the future. Monopolization Most people have heard of monopolization of a market, and most people know that law prohibits this practice. Unfortunately most people don’t know or understand what types of business practices actually construe monopolization of a market. Monopolization can occur in any size of market from a small local market to a national market. Monopolization involves any one of the following business practices: acquiring competitor’s businesses in an attempt to maintain control of a monopoly position in a specific market, controlling market prices through various means, and excluding competitors in a market. Unfair Business Conspiracies Conspiring to maintain the prices of services and goods in a particular market is considered to be an unfair business practice. The first type of conspiracy that is prohibited by federal antitrust law is conspiring with competitors to control the price of specific services or goods. For example if all the tire stores got together to discuss how specific tires should be priced, they could be charged with a violation of antitrust laws. The second conspiracy that is prohibited by federal antitrust laws involves the conspiracy of one group of companies to boycott another company or supplier. This conspiracy inhibits the ability of another competitor from entering into a market, and inhibits their rights within a free market system. The final conspiracy that is outlawed by federal antitrust laws involves market territories. It is against federal antitrust laws for competitors to get together to discuss the division of a market into territories or assigning specific customers to specific businesses. Again this practice is unfair because it eliminates the free choice of a customer in regards to who they want to give their business to, and it inhibits the functioning of a free market system. Using Company Power within a Market to Gain an Unfair Market Advantage The final business practice that is considered unfair by federal antitrust laws is the use of market position to coerce suppliers into giving your...

Read More