RESTRAINT OF TRADE AND THE ANTITRUST LAWS
One way that policy discourages cooperation is through the common law. Normally, freedom of contract is an essential part of a market economy. Businesses and households use contracts to arrange mutually advantageous trades. In doing , they rely on .the court system to enforce contracts. Yet for many centuries, judges in England and he United States deemed agreements among competitors to reduce raise prices Connery the public good. They have therefore refused to enforce .
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any person or persons to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and on conviction therefor, shall be punished by fine not exceeding fifty thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the diciest on of the court.
The Clayton Antitrust Act of 1914 further strengthened the antitrust laws. According to this law, if a person could prove that he was damaged by an illegal arrangement to restrain trade, that person could sue and recover three times the damages he sustained. The purpose of this unusual rule of triple damages is to encourage private lawsuits against conspiring oligopolists.
Today, both the U.S. Department of Justice and private parties have the authority to bring legal.suits to enforce the antitrust laws. As we discussed in Chapter 15, these laws are used to prevent mergers that would lead to excessive power in any single firm. In addition, these laws are used to prevent oligopolists from acting together in ways that would make their markets less competitive.
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