Susceptibility to an Antitrust Issue

In assessing an antitrust problem, the first thing to examine is the conduct itself and whether the conduct could restrain competition, e.g., limit the ability of sellers to effectively compete or buyers to have access to a number of sellers. Activities such as agreements on price, agreement not to compete, agreements that foreclose competition (such as exclusive agreements), or mergers that eliminate competition are among those kinds of conduct that can raise antitrust issues. Even if the conduct is potentially anti-competitive, in many cases that is not enough. You then have to look at the impact on the market in question. You have to define the market first and then decide whether the market overall will be harmed by that conduct. If not, in many cases there is no antitrust problem. In other cases, an antitrust problem and an anticompetitive effect are presumed because the conduct is of a kind that is viewed as almost always being anticompetitive. That analysis applies to such activities as price-fixing between competitors and agreements between competitors to divide up markets between themselves .

There are certain kinds of industries that are highly competitive and where there are no or very limited barriers to entry. In those industries, it is very difficult for conduct no matter how badly intended to have an adverse impact on the overall market. For example, retailing is in many ways an area in which there is a lot of competition, and there have been relatively few antitrust problems found with respect to retailing over the years . There have nevertheless been some cases in particular kinds of retailing where antitrust problems have been found. The Staples/Office Depot merger involving office superstores was successfully stopped by the FTC; the agency convinced the court that there was a separate market for office superstores and in that market, there were very few competitors and therefore there was a concern. A number of supermarket mergers have been enjoined over the years.

At the other extreme, markets with few competitors and high barriers to entry are the kinds of markets in which antitrust problems are more likely, and those are markets where there has been a great deal of antitrust activity. Again, the likelihood of an antitrust problem may depend on the characteristics of competition for a given product at a particular period of time, but antitrust concerns have been common in certain high-tech markets in recent years. The characteristics of the market often lead to one or two winners and a lot of losers. If there is conduct in such a market that can restrain competition further, that can be especially significant.