FAQ > Antitrust FAQs
Frequently Asked Questions
As a businessperson, I’ve always thought it was a good idea to belong to a trade association. But if competitors talking to each other is collusion, aren’t trade associations illegal?
No. The antitrust laws do not require business people to avoid each other. They can join trade associations, they can participate in industry-wide programs, they can socialize with each other. However, they cross the line when the subject of these interactions becomes price, territorial division, merchants with whom they will or will not deal, product quality or the like. In short, a good rule of thumb is: a firm may meet with its competitors in a group setting, but should not discuss, and cannot
collaborate with them, on issues on which they should be competing.
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Gasoline prices at different stations in my neighborhood always seem to go up and down together – usually within hours or minutes of each other. Isn’t this a sure sign that these stations are colluding?
Gasoline pricing is a concern of all consumers, most of whom are perplexed by the fluctuations in gasoline prices. Sudden increases and even decreases in the price of gasoline at the pumps lead many people to believe that these parallel price changes are the result of illegal price fixing. Unfortunately, parallel behavior of this type alone does not constitute proof of an antitrust violation. In order to prove a violation punishable by the antitrust laws, there must be additional evidence that tends to show an agreement among the competitors to set or affect the price or price levels of the product or service in question. The retail gasoline market is what is known as an interdependent market. This means that each seller in the market is often aware of his competitors' behavior and that his own pricing behavior will affect others. For example, because of very public and visible price-posting that is required by law, a gasoline retailer can easily determine what his competitor next door is charging just by looking at the sign, and decide what price he wants to charge accordingly. Since gasoline demand is relatively constant, depending on the time of year, there is little risk in choosing to raise prices in response to a competitor's price increase. This is why when pump prices go up (or down) at one station it is often followed very quickly by price increases (or decreases) at the other stations in the area. All of this can occur without the station owners ever reaching any agreement to increase their prices. Moreover, strictly unilateral behavior of this type, standing alone, is not punishable by the antitrust laws since the antitrust laws are primarily concerned with pricing decisions when they are the result of a conspiracy. On the other hand, if firms involved in the production, refining, distribution or sale of oil, gasoline or other petroleum products agree with each other on price or other terms of sale, such an agreement would violate the antitrust laws. Thus, if you have any information that indicates that fluctuations in gasoline prices are the result of some actual agreement, please call our office.
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I live in a small community with only one grocery store. It carries only Coke and not Pepsi. Isn’t this the kind of restriction on consumer choice that the antitrust laws are designed to prevent?
While it is possible that the situation described here is the result of actions which violate the antitrust laws, it is also quite probable that that is not the case. If the store described above has decided, on its own, using its independent business judgment, that it wishes to carry only one brand of soft drink, the antitrust laws will not prohibit it from doing so. On the other hand, if the store’s decision arises out of an agreement among multiple retail stores to boycott Pepsi, or out of an intention to harm or destroy Pepsi, then this may be the kind of anticompetitive behavior that the antitrust laws were designed to prevent.
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There’s only one company that provides cable television service in my community. Isn’t that an illegal monopoly?
Citizens of cities and towns all across Ohio (and indeed across much of the nation) have echoed this concern. When more than one cable company runs cable lines through a given area, this is called overbuilding. Overbuilding does not happen in every area. Whether this is because of an illegal conspiracy, or merely because of the financial realities of the business environment, is a much more difficult question. Cable companies have to decide whether it is worth the cost of running new lines into a community in which they will only have a portion of the total cable customers. On the other hand, some companies are in the process of overbuilding a number of cities and towns in Ohio, proving that it is not entirely cost prohibitive. In addition, in most communities, consumers are afforded the choice of cable service versus new technologies such as satellite-based television transmission services. The Attorney General is keenly aware of the importance of striking the proper balance between maintaining vigorous competition through antitrust enforcement, and allowing businesses to refrain from serving areas which their independent business judgment tells them would be unprofitable. As in every case, please do not hesitate to bring information to our attention that might provide evidence of an actual agreement to allocate territories among cable companies operating in the State of Ohio.
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