 To make businesses compete fairly

Why?
 Consumers - through lower prices,
better quality and greater choice.
 Businesses - by giving them the

opportunity to compete on price and

quality, in an open market and on a
level playing field, unhampered by
anticompetitive restraints.
 U.S.– main focus is on how actions of
one business affect other businesses
 EU – main focus if on how actions of

a business impacts consumers

 U.S. EU China
What is Anti-Trust Anti- Anti-
law law Competition Monopoly
called? Law Law
Who/Wha How How actions Mergers
t is the actions of of a between
main one business companies
focus? business impact
affect consumers
other
businesses
Four main areas:
2.agreements between competitors
3.contractual arrangements between
sellers and buyers
4.the pursuit or maintenance of
monopoly power
5.Mergers that threaten the
competitive process
 Generally a company must have at
minimum a 50 percent share in a
properly defined relevant market.
 American antitrust law permits a

company to hold a monopoly, but it

forbids a company from
leveraging its dominance to
restrict competition.
 When only one firm provides a product
or service, and
it has become the only supplier not
because its product or service is superior
to others, but by suppressing
competition with anticompetitive
conduct.
The Act is not violated simply when one
firm's vigorous competition and lower
prices take sales from its less efficient
competitors - that is competition working
Agreements to:
 fix prices.
 boycott competitors, suppliers, or

customers.
 allocate markets or limit production
 tie one product to another product
 An agreement among competitors to
raise, fix, or otherwise maintain the
price at which goods or services are
sold. All companies raise prices by
the same amount or to the same
price.
Competitors should not
 Discuss prices or features that can

impact prices such as discounts, costs

of common inputs, inventory and
output levels, salaries, terms and
conditions of sale, warranties, or profit
margins.
 Agree to divide customers, markets, or

territories.
 Agree to uniform (the same) terms of

sale, warranties, or contract provisions.

 Companies accused: Hershey,
Cadbury, Mars and Nestle.
 Together they control 75 percent of the

U.S. chocolate market.

 Accused of conspiring to raise

chocolate candy prices by about 10

percent in December 2002, 6 percent in
December 2004 and 5 percent in April
2007.
 China’s airlines have recently been
accused of coordinating the prices
and the amount of the price increase
of tickets. The prices of all the
airline companies had increased by
the same margin.
 British Airways and Virgin Atlantic
agreed to settle a U.S. price-fixing suit
over fuel surcharges
 Sharp, LG, and Chunghwa Picture Tubes

pled guilty to charges that they

collaborated to fix the price of LCD
displays, including those for the Apple
iPod, Motorola Razr phone, and Dell
products.
 Anarrangement or agreement in
which a seller will sell a product to a
buyer only if the buyer will also buy
another product.
 Example: requiring a bookstore to buy
an unpopular title before allowing them
to purchase a bestseller.
 bybeing forced to buy an
undesired good (the tied good) in
order to purchase a good they
actually want (the tying good).
They would prefer that the goods be
sold separately.
 Charge – Consumer must buy iPod in
order to download iTunes.
 Apple has an 80 percent share of the

market for legal digital music files

and more than 90 percent of the
market for portable hard-drive digital
music players.
 What was Microsoft accused of doing
in the U.S. case?
 Microsoft abused monopoly power in
its handling of operating system
sales and web browser sales.
 Can Microsoft lawfully integrate

other pieces of software into

Windows?
 Who is harmed if Microsoft does this?
 In 1998 Microsoft’s web browser,
Internet Explorer, was a small player
compared to Netscape and other
browser programs.
 By the end of 2006, Netscape’s

market share of browsers had fallen

from over 90% in the mid 1990s to
less than 1%.
 Why?
 Microsoft had “bundled” its Internet
Explorer program into Windows, so
every Windows user had a copy of IE.
 This unfairly restricted the market for

competing web browsers that were

slow to download over a modem or
had to be purchased at a store.
 offering
several products for sale as
one combined product.
 Merging of Microsoft Windows and
Internet Explorer was the result of
innovation and competition
 The two programs were now the

same product and impossible to

disentangle or untie, and
 Consumers were now getting all the

benefits of IE for free.

 The browser was still a distinct and
separate product which did not need
to be tied to the operating system.
 IE was not really free because its

development and marketing costs

may have kept the price of Windows
higher than it might otherwise have
been.
 Break up Microsoft into 2 companies
–
 Operating System
 Software
 Overturned on appeal
 Settlement required Microsoft to

share its application programming

interfaces with third-party companies
so they could write programs that
would work on Windows.
 Did not require Microsoft to remove
its web browser from its Windows
operating system.
 So – Microsoft was free to add

(bundle) other software into Windows

in the future.
 Did it do this?
Trying to extend its desktop
monopoly into the market for
workgroup servers. How? By
keeping secret the code that lets
these two types of computers “talk”
to each other.
Involved bundling Windows Media
Player into Windows.
 Microsoftordered to offer both a
version of Windows without Windows
Media Player and the information
necessary for competing networking
software to interact fully with
Windows desktops and servers.
 What is the battle between these two
giants?
 What is each good at?
 Microsoft – dominant position in
web-browser and operating system
software
 Google – dominates internet-search

business
 June,
2007 – Microsoft agreed to
create a way for users to choose a
default desktop search engine. Case
dismissed.
 Level playing field (para. 7)- fair
competition, where no advantage is shown
to either side.
(Comes from the requirement for fairness in
games which are played from end to end of
a field and where a slope would give one
team an advantage)
 In the wake of (para. 16)- as a result of,
following directly
 Struck a deal (para. 16)- reached an

agreement
 To squash (para. 25)- to overcome (a
difficult situation), often with force
 Play its trump card (para. 25)- use an

advantage, weapon, etc., that is kept in

reserve until needed
 Arguments will be raging (para. 27) -

very intense discussions or arguments

 Cry foul (para. 27) - to say that

something which has happened is unfair

or illegal
 In tandem (para. 29) - one following or

behind the other; at the same time.

 Discrimination - treating a person
differently based on the group, class, or
category to which that person belongs
rather than on individual merit.
 Job descriptions – a document that
describes the duties, responsibilities,
qualifications and any restrictions of a
job.
 Strings attached – having special
conditions or restrictions
 Have an ax to grind – 1. have a
selfish reason for saying or doing
something 2. have a strong opinion
about something that influences your
actions
 A case in point – an example that is
relevant to the matter being discussed
 HR Laws in the U.S
 What is employment discrimination?
 What actions are prohibited in the U.S.?
 What classes or groups are protected?
 Job Descriptions
 What is their purpose?
 What is included in a job description?
 Antitrust Law – Microsoft Case
 What was illegal about what Microsoft
did? Why was it illegal?
 What are the four main areas that are
illegal?
 Global
Institutions – World Bank, IMF,
GATT, WTO, G-20 Conference
 What is the function or purpose of each
institution?
 How is the World Bank different from the
IMF?
 What does GATT regulate?
 Only two competitors– Intel and AMD
 Product – chips that run computers
 Market - more than $225 billion in
global sales each year
 Intel controls 80 to 90 percent of the
microprocessor market.
 Remember - American antitrust law
permits a company to hold a monopoly,
but it forbids a company from
leveraging its dominance to
restrict competition.
 Intel’s pricing is intended to maintain a
near monopoly on the microprocessor
market.
 Intel systematically gave its

customers — the world’s leading

personal computer makers — large
discounts, at times below Intel’s own
manufacturing costs, in exchange for
commitments not to do business
with competitors (like AMD).
Gave computer makers rebates on
condition they agreed to obtain
most or all of their CPUs from Intel
Made payments "to induce
(computer makers) to either delay
or cancel the launch" of products
using AMD chips
Sold CPU chips at below cost to
strategic customers such as
governments and educational
institutions.