Anti-Trust Law the American Dream Term Paper

One of the reasons it is against the anti-trust laws to do this is because it places large businesses like Wal-mart and Microsoft at an unfair advantage because they have enough capital to get through lean times caused by below cost pricing long enough to drive the small business competitors out of business.

Many states have laws against selling gasoline below a legal limit that is set by the government for that purpose.

Several years ago when the price of gas was on the rise companies began realizing that if they offered gas at a reduced rate it would lure consumers into their business and allow them to purchase other goods.

One example was suit filed against Kroger in which the store was accused of violating antitrust laws when it priced its gas below cost.

The store argued that it was not doing so to drive other gas stations out of business but to entice consumers to stop for gasoline and then come into the store and purchase groceries.

Because of the impact the reduced gasoline prices was having on surrounding suppliers of gasoline the stores were ordered to raise their per gallon price to meet or exceed the minimum standards set by law.

Kroger's defense was that it was one of the only ways it could be competitive among the many discount grocery stores in the area.

New York recently went through an anti-trust issue with gasoline sales by ordering a reduction in competitive stations opening in areas where there was already a saturation of stations (Proposed New York Gasoline Legislation Could Harm Consumers, Says FTC Staff (http://www.ftc.gov/opa/2002/08/nygas.htm).

Consumers argued against this mandate as they felt the additional stations would bring healthy competition and drive the prices down that the consumer would pay.

The federal antitrust laws deal specifically with below-cost pricing that has a dangerous probability of leading to monopoly.The FTC, the Department of Justice's Antitrust Division, state attorneys general, and private parties can bring suit under the federal antitrust laws against anticompetitive below-cost pricing (Proposed New York Gasoline Legislation Could Harm Consumers, Says FTC Staff (http://www.ftc.gov/opa/2002/08/nygas.htm)."

Because of the difficulty of proving that below cost pricing or significant reductions in price is for the purpose of violating anti-trust laws and driving competition out of business small businesses in America are often left without recourse when they believe it is occurring.

Small businesses must then find other ways to compete and find their niche market in whatever field they are selling products and services in.

One of the things that small businesses can do is specialize in an area that the larger businesses don't have time or space to do. It will help to provide a place for the customers who want specialized products or services and are willing to pay a little extra to have it.

Another thing that small businesses can do is combine their efforts to provide a wider variety or product and service to the consumer.

Finally, the most important and effective weapon the small business has against the giants is personalized, superior customer service.

References

Antitrust below cost pricing http://en.wikipedia.org/wiki/Predatory_pricing

Proposed New York Gasoline Legislation Could Harm Consumers, Says FTC Staff

http://www.ftc.gov/opa/2002/08/nygas.htm

AG takes aim at below-cost pricing statute: Issue was highlighted in a recent federal court decision against Kroger Co. For offering customers discount on gas for buying groceries.

From: Pueblo Chieftain (Pueblo, Colorado) | Date: December 19, 2006 | More results for: anti-trust

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