This document discusses antitrust policy and competition law. It provides definitions of antitrust law, outlines its three main elements which are prohibiting anti-competitive agreements, banning abusive behavior by dominant firms, and supervising large mergers. It also discusses objectives of antitrust policy, anti-competitive practices, federal antitrust laws in the US and India's Competition Act. Specific cases involving Microsoft, Standard Oil, IBM, and AT&T are analyzed. The document also summarizes criticisms of antitrust laws.

1. Microsoft Confidential
ANTITRUST POLICY
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By:
V.KARTHIK

2. Microsoft Confidential
AGENDA
Antitrust policy
Objectives of Antitrust policy
Why promote competition
Anti-competitive practices
Federal Antitrust Laws in U.S
Competition Act in India
Background of India
Merger Policy
Microsoft-Yahoo merger case
History of cases
Microsoft cases
Criticisms of Antitrust law 2

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ANTITRUST POLICY
ANTITRUST LAW
Government actions designed to promote competition among firms in the
economy.
Antitrust law also known as competition law, has three main elements:
1) prohibiting agreements that restrict free trading and competition between business
entities.
2) banning abusive behaviour by a firm dominating a market, or anti-competitive practices
that tend to lead to such a dominant position.
3)supervising the mergers and acquisitions of large corporations. Transactions that are
considered to threaten the competitive process can be prohibited altogether.
3
TRUST
A group or collection of firms who agree to coordinate efforts for
the purpose of restricting output and raising prices/profit. Also
known as cartels

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Objectives of Antitrust policy
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Why promote competition
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“Having a monopoly is not illegal
It all depends on how you get the monopoly”

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Anti-competitive practices
Product
bundling
Predatory
Pricing
Exclusive dealing
PROFITS
by reducing
competition
Price fixing
Collusion
Refusal to deal
(Group boycott)
Anti-competitive
practices
2007: British Airways and Korean Air Lines
fined by regulators for price-fixing in fuel
surcharges ,cargo & passenger rates2005: WAL-MART accused of predatory pricing
by small retailers & labour unions

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Frequently asked questions
?
?
The gasoline stations in my area have
increased their prices the same amount
and at the same time. Is that price-fixing?
?
?
?
?
?
?
?
I operate two stores that sell recorded
music. My business is being ruined by
giant discount store chains that sell
their products for less than my
wholesale cost. I thought there were
laws against price discrimination, but I
can’t afford the legal fees to fight the
big corporations. Can you help?
I operate two stores that sell recorded
music. My business is being ruined by
giant discount store chains that sell
their products for less than my
wholesale cost. I thought there were
laws against price discrimination, but I
can’t afford the legal fees to fight the
big corporations. Can you help?

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Inefficiency of monopoly - By Price Fixing
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DemandPrice
Qty

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Federal Antitrust Laws
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Competition Act in India
Finance Minister, P.Chidambaram (2003) highlighted the need to have a strong legal
system and said
“A world class legal system is absolutely essential to support an economy
that aims to be world class. India needs to take a hard look at its
commercial laws and the system of dispensing justice in commercial
matters.”
With the zeal Government went ahead and enacted the Competition Act 2002
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12. Microsoft Confidential
Background of India
Competition (Amendment) Act,
mid 2008
Competition Act, 2002
MRTP Act, 1969
Monopolies & Restrictive Trade Practices Act
The Monopolies and Restrictive Trade Practices Act, 1969 focused in curbing monopolies
1999: A committee (CCI-Competition Commission of India) was setup by govt to examine the MRTP Act 1969 &
for shifting the focus of the law from curbing monopolies to promoting competition
Following which the Competition Act, 2002 was enacted and notified in January 2003.
.
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Market share
Google has the lion's share of the
search market
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SOURCE :
As of Jan 2008
Merger Policy
Govt has to decide whether a merger reduces competition in the mkt

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MICROSOFT-YAHOO MERGER
• MICROSOFT:"The combination of Microsoft and Yahoo will create a more competitive marketplace
by establishing a compelling No. 2 competitor for Internet search & online advertising"
• Google is prevented by the antitrust laws from buying Yahoo or buying this business from Yahoo
• GOOGLE: is concerned that Microsoft can "unfairly limit the ability of consumers to freely access
competitors' email and instant messaging services. Microsoft + Yahoo = Antitrust
• Microsoft would need approval from the Federal Trade Commission (FTC) in the U.S. & the
Competition Commission in the EU for the deal to pass through
• Google and a Microsoft-Yahoo would control 80% to 90% of the search market OLIGOPOLY14

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HISTORY OF CASES
Standard Oil: Monopolized the oil refining
industry illegally. In 1911 it was broken into
separate entities (Exxon, Mobil, Chevron, Amoco)
IBM: U.S Govt brought antitrust action against IBM in 1969
because of its dominance in mainframe computer mkt.Govt
withdrew the case later in 1982 when it faced stiff competition
from smaller computers, Apple Computers etc
AT&T: U.S Govt took action against AT&T in 1970s as it was the only
significant supplier telephone service. It was broken apart & had to
compete with MCI & Sprint.
This increase in competition lowered the cost.
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16. MICROSOFT CASES
European Union
Microsoft antitrust
case
Microsoft has been hit with an €899m ($1.4bn) fine for failure to
comply with European regulators' demands to end allegedly anti-
competitive business practices.MS failed to provide information
necessary for competing networking software to interact fully with
Windows desktops and servers & also failed to unbundle Windows
media player from Windows
Govt’s interest in Microsoft's affairs had begun in 1991 with an inquiry
by the FTC over whether Microsoft was abusing its monopoly on the
PC operating system market
1998 – Case filed against MS when it bundled Internet Explorer
along with its OS.
This restricted the mkt for competing web browsers( Netscape
navigator etc.). Order was reversed in 2001 when MS agreed to provide
billions of software & services to public schools
United States
Microsoft antitrust
case

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MERGER & ACQUISITION POLICY
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Horizontal v/s vertical mergers
Monopolization Horizontal v/s vertical restraints

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•Antitrust Paradox: Original intention of antitrust laws was consumer welfare &
protection of competition rather than competitors
•Paradox of antitrust enforcement was that legal intervention artificially raised prices by
protecting inefficient competitors from competition .
•Only a few acts should be prohibited, namely price fixing, mergers that create
monopolies & pricing predatorily, while allowing practices such as price discrimination
•The late Nobel economist believed that Antitrust laws do far more harm than good
•“Antitrust case against Microsoft set a dangerous precedent that foreshadowed
increasing government regulation of what was formerly an industry that was relatively
free of government intrusion and that future technological progress in the industry will
be impeded as a result”
•Changed views overtime
•Antitrust laws prevent firms from actions that may benefit society due to fear of
antitrust violations
•Condemns the Sherman Act as stifling innovation and harming society
•"No one will ever know what new products, processes, machines, and cost-saving
mergers failed to come into existence, killed by the Sherman Act before they were born”
Robert Bork
Milton Friedman
Alan Greenspan
Criticisms of Antitrust Laws

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Confidential
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