/**/wistiajson2({"captions":[{"id":561889,"language":"eng","english_name":"English","native_name":"English","right_to_left":false,"hash":{"lines":[{"start":4.319,"end":10.259,"text":["The Sherman Anti-Trust Act of 1890 was enacted to disband monopolies and cartels"]},{"start":10.549,"end":15.509,"text":["to prevent unfair competition. The purpose of the act was to ensure that all businesses"]},{"start":15.709,"end":21.259,"text":["that engage in interstate commerce retain their right to fair competition. The Sherman"]},{"start":21.459,"end":26.94,"text":["Anti-Trust Act Section 1 states 'no company may engage in interstate commerce with the"]},{"start":27.139,"end":32.04,"text":["intention to scheme between competitors to level the competition or gain market control.'"]},{"start":32.85,"end":38.119,"text":["Said a different way, it is illegal to unreasonably restrain trade amongst competitors, and"]},{"start":38.319,"end":44.82,"text":["these agreements can be either horizontal or vertical. A horizontal agreement is made between"]},{"start":45.02,"end":49.54,"text":["competing businesses to manipulate competition amongst all competitors in the marketplace."]},{"start":50.359,"end":55.46,"text":["In contrast, a vertical agreement is made between a seller and a buyer in where a retailer"]},{"start":55.85,"end":61.079,"text":["can buy products from one manufacturer but in the agreement is restricted from buying from"]},{"start":61.279,"end":67.759,"text":["a competing manufacturer. Here are some examples of both types of agreements: * Price fixing"]},{"start":68.459,"end":75.58,"text":["Market allocations * Boycotts * Tying agreements * Monopolies Price fixing is a horizontal"]},{"start":75.78,"end":81.8,"text":["agreement involving competitors conspiring to raise, decrease, fix or stabilize prices in"]},{"start":82.0,"end":89.249,"text":["a specific market. It sounds confusing, but it is really quite simple. Companies who intentionally"]},{"start":89.449,"end":94.699,"text":["engage in price fixing do so primarily to manipulate prices to cause an unfair advantage."]},{"start":95.63,"end":101.059,"text":["This price manipulation creates a situation where, in many cases, competitors set same prices"]},{"start":101.259,"end":107.27,"text":["on their products and it negatively affects others in the marketplace. For example, Stone's"]},{"start":107.48,"end":112.31,"text":["Filling Station is located on the eastbound side of Route 1, and Hillbilly Millie's Gas and Go"]},{"start":112.5,"end":117.54,"text":["is located on the westbound side of the same highway. Both Stone and Millie may set the"]},{"start":117.74,"end":123.41,"text":["set the same price of $1.68 per gallon. There is nothing illegal about it. However,"]},{"start":123.789,"end":128.439,"text":["if one can prove that the owners made the decision to sell at the exact same price in order"]},{"start":128.639,"end":133.569,"text":["to affect the natural market fluctuation that results from supply and demand, it would be"]},{"start":133.769,"end":139.951,"text":["illegal. Both Stone and Millie know that there is going to be a big concert in town. People"]},{"start":140.15,"end":146.01,"text":["will be traveling from the east and west to arrive at the destination. The destination, coincidentally,"]},{"start":146.509,"end":152.58,"text":["only has two filling stations: one owned by Millie and one by Stone. There is no other place"]},{"start":152.78,"end":159.029,"text":["to get gas for up to at least 100 miles in either direction. If Millie and Stone conspire"]},{"start":159.229,"end":163.26,"text":["to raise gas prices to $3.98 per gallon, they are messing"]},{"start":163.46,"end":168.349,"text":["with the natural ebb and flow of supply and demand. In other words, customers may need to"]},{"start":168.549,"end":173.21,"text":["fill up when they arrive or before they leave the concert. They are given no choice but to"]},{"start":173.41,"end":181.42,"text":["to pay a gouged, or unfairly inflated price, for their fuel. Market allocations are also horizontal"]},{"start":181.62,"end":186.559,"text":["agreements and happen when competing companies choose specific territories to sell products"]},{"start":186.94,"end":191.71,"text":["and neither company sells to the other company's customers. What makes this arrangement"]},{"start":191.91,"end":197.65,"text":["illegal is it creates a monopoly for each territory. Let's see if we can break this down."]},{"start":198.289,"end":203.4,"text":["Suppose there were only two manufacturers of office copy machines, Conglom Copier Co. and"]},{"start":203.919,"end":209.809,"text":["and Comp-U-Copiers, Inc. and both make very similar products. If the two companies decide"]},{"start":210.009,"end":215.039,"text":["to split the country into two, say north and south, with Conglom selling copiers to the lower"]},{"start":215.239,"end":220.289,"text":["states and Comp-U-Copiers selling to the upper states, they will create a monopoly in where"]},{"start":220.499,"end":224.98,"text":["the businesses in their territory have only one choice, which is to buy from the company"]},{"start":225.169,"end":230.65,"text":["that sells exclusively in their location. With this type of illegal agreement between the two"]},{"start":230.85,"end":235.719,"text":["companies, they have the ability to fix prices to whatever they desire because the businesses"]},{"start":235.919,"end":242.589,"text":["that need to buy from them have no choice. Boycotts are illegal vertical agreements between"]},{"start":242.789,"end":247.839,"text":["a group of businesses to stop using a company's product or services in order to negatively"]},{"start":248.039,"end":254.279,"text":["affect their ability to compete in a market. Don't get me wrong. A business has every right"]},{"start":254.479,"end":259.089,"text":["to choose whom to do business with. There is nothing illegal about making prudent product"]},{"start":259.289,"end":264.961,"text":["choices. It becomes illegal when it is a concerted and deliberate group effort to kick one"]},{"start":265.16,"end":271.31,"text":["company to the curb. Let's say We Care Insurance Company decides to increase their payouts"]},{"start":271.51,"end":277.299,"text":["to doctors in a certain territory only if they accept their insurance exclusively. We Care"]},{"start":277.499,"end":281.951,"text":["Insurance may contact all of the doctors in the area to tell them about the new payment"]},{"start":282.15,"end":291.479,"text":["schedule. Since most doctors take several insurances, there is built-in competition. However,"]},{"start":291.78,"end":296.539,"text":["by making an attractive offer to several hundred doctors in one region, it could wipe out"]},{"start":296.739,"end":301.93,"text":["business for all other insurance carriers. On a side note, it would be awfully inconvenient"]},{"start":302.129,"end":308.049,"text":["for patients who do not subscribe to We Care as well. Tying agreements are vertical agreements"]},{"start":308.249,"end":313.27,"text":["where a manufacturer sells a product and the necessary complementary products needed to use"]},{"start":313.47,"end":318.539,"text":["the tying product and forces the customer to buy all complementary products exclusively"]},{"start":318.739,"end":326.599,"text":["from the manufacturer. Let's use Conglom Copier Co. Suppose Conglom sells several hundred"]},{"start":326.799,"end":332.06,"text":["copiers to a major law firm. In the agreement to purchase the copiers at a specific price,"]},{"start":332.549,"end":338.38,"text":["they require that the law firm also purchase paper from Conglom exclusively. In other words,"]},{"start":338.76,"end":342.83,"text":["regardless of whether paper is available at an office supply wholesaler for less money,"]},{"start":343.239,"end":349.349,"text":["the law firm must only purchase paper from Conglom. This creates market domination"]},{"start":349.549,"end":355.71,"text":["for Conglom on the sale of copiers and paper. Competing copy paper sellers cannot sell to those"]},{"start":355.91,"end":362.169,"text":["who purchased copiers from Conglom. Of the horizontal and vertical agreements we reviewed,"]},{"start":362.52,"end":368.33,"text":["monopolies are probably the most dangerous. They involve one or very few companies who dominate"]},{"start":368.559,"end":373.44,"text":["a particular market, leaving no room for others to compete. This domination could be market-based"]},{"start":373.64,"end":380.159,"text":["or even product-based. Keep in mind, exclusive rights to sell in a specific venue is"]},{"start":380.359,"end":386.469,"text":["not really a monopoly. For example, a ballpark may only sell a certain brand hot dog. Other"]},{"start":386.589,"end":391.008,"text":["hot dog companies cannot say that they are being forced out of a market because a stadium"]},{"start":391.048,"end":395.88,"text":["has a right to choose one brand over another. Where it gets a little sketchy is when"]},{"start":396.08,"end":401.91,"text":["only one company has a stranglehold on the market. Way back before cars, trucks and airplanes"]},{"start":402.109,"end":408.12,"text":["were in full swing, stuff was transported far distances using the railways. Because the railroad"]},{"start":408.32,"end":412.57,"text":["was the only way to get things from one place to another, they held the market share as"]},{"start":412.77,"end":417.77,"text":["transportation providers. If a company needed to get their lumber from Florida to Tennessee"]},{"start":417.97,"end":424.179,"text":["the rail was the only way to make the delivery. With this kind of control over the transportation"]},{"start":424.379,"end":430.26,"text":["of goods, railroad owners, and there were few, could charge any price they desired. Businesses"]},{"start":430.489,"end":435.44,"text":["in need of their services were left with few options but to pay or to not have their products"]},{"start":435.64,"end":442.599,"text":["hauled. As other modes of transportation became available, this monopoly was disbanded. However,"]},{"start":442.799,"end":448.159,"text":["for products that are not easily transported by other means, like gravel, sand, cars or livestock,"]},{"start":448.359,"end":455.52,"text":["it still in a way represents a small monopoly. The way the courts analyze whether"]},{"start":455.749,"end":461.69,"text":["a vertical or horizontal agreement exists is by using the rule of reason. It is a doctrine"]},{"start":462.059,"end":466.599,"text":["that looks at a few things to determine whether the trade restraints have had or will have"]},{"start":466.799,"end":472.941,"text":["negative effect on competition, like: * Proof of a naked restraint where limitations were"]},{"start":473.14,"end":478.38,"text":["or will be placed on competitors attempting to enter into a marketplace, like price fixing, proof that"]},{"start":478.58,"end":483.729,"text":["the restraints were or will be in place and proof that the restraints have or will create"]},{"start":483.929,"end":490.219,"text":["market domination for one or a few companies Once the rule of reason is applied, a court can"]},{"start":490.419,"end":494.583,"text":["decide whether the trade restrains actually do create unfair competition."]},{"start":498.383,"end":504.029,"text":["In sum,The Sherman Anti-Trust Act of 1890 was enacted to disband monopolies and cartels to prevent"]},{"start":504.26,"end":509.951,"text":["unfair competition. Section 1 states 'no company may engage in interstate commerce with"]},{"start":510.15,"end":514.829,"text":["the intention to scheme between competitors to level the competition or gain market control.'"]},{"start":516.34,"end":520.86,"text":["There are two types of illegal agreements. Horizontal agreement is made between competing"]},{"start":521.06,"end":525.62,"text":["businesses to manipulate competition, and a vertical agreement is made between a seller"]},{"start":525.82,"end":530.809,"text":["and a buyer where a retailer can buy products from a manufacturer, but in the agreement"]},{"start":531.04,"end":536.569,"text":["is restricted from buying from a competing manufacturer. Examples include price fixing, market"]},{"start":536.769,"end":543.449,"text":["allocations, boycotts, tying agreements and monopolies. The courts use the rule of reason"]},{"start":543.69,"end":548.799,"text":["to determine whether the trade restraints have had or will have a negative effect on competition,"]},{"start":549.779,"end":554.529,"text":["The doctrine looks for proof of a naked restraint where limitations were or will be placed"]},{"start":554.729,"end":559.63,"text":["on competitors attempting to enter into a marketplace, like price fixing, proof that the"]},{"start":559.83,"end":565.179,"text":["restraints were or will be in place and proof that the restraints have or will create market"]},{"start":565.379,"end":571.63,"text":["domination for one or a few companies. The analysis of facts will sort out whether a true"]},{"start":571.83,"end":574.63,"text":["violation of the Sherman Anti-Trust Act exists."]}]},"key":"wistia-production_561889"}],"preferred_languages":["eng"]})