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The Sherman Antitrust Act

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In 1890, Congress passed the Sherman Antitrust Act to battle anticompetitive practices, reduce market domination by individual corporations, and preserve unfettered competition as the rule of trade ("Antitrust: an overview," 2011).The antitrust investigation that I am looking at is against several major baby formula brands. Companies that were involved in this investigation include Mead Johnson Nutrition of the United States, Dumex which is owned by Danone, Wyeth which is owned by Nestle, Abbotts and Friesland Campine, Biostime, and Beignmate. These companies are being investigated by the National Development and Reform Commission. They are accused of violating Article 14 of the Anti-monopoly law by limiting the lowest prices offered to their …show more content…

The government has put a limit on the amount of milk powder that can be purchased by Chinese who travel to Hong Kong. The People’s Daily, the official publication of the Communist Party, said in a commentary that since 2008, foreign milk powder companies had increased their prices in China by around 30 percent (Edward, 2013). Foreign milk powder has 60 percent of the market share in China compared with 30 percent before 2008, the commentary said (Edward, 2013). Since August 2008 when the enactment of the antimonopoly law the Chinese government have really been going against foreign companies for antitrust …show more content…

There are only a few firms that make up this industry and they have control over the price. These companies have high barriers to entry the market. The products they produce are similar which cause competition. There is both good and bad when it comes to oligopoly and monopolies. Some good things about oligopoly are by developing product innovations and taking advantage of economies of scale. With oligopoly it is more likely to expand production capabilities, promote economic growth, and they develop change that advances the level of technology ("Oligopoly," 2000). Some bad things about oligopoly is that they tend to be inefficient in the allocation of resources and promotes the concentration of income and wealth ("Oligopoly," 2000). They charge much higher prices and end up producing less of an output than the efficiency benchmark of perfect competition. One of the good forms is natural monopoly. Natural monopoly exists when economies of scale encourage production by a single producer (Mayer). An example of this is your local electrical utility. As a power plant increases, the cost per kilowatt hour of electricity falls (Mayer). If we were to all use small generators to run our homes the cost of each household would be ridiculous. The total fixed cost of generators for the community would be high and the variable cost of running it would also be high. Another form of monopoly that is good is

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