Consumer Protection and the Federal Government

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Due to increasing consumer resentment towards ever-increasing monopolistic industries in the late 1800’s and early 1900’s, the government formulated antitrust laws to allow for a more competitive market. The legislations prohibit anticompetitive business practices such as price fixing, bid rigging, monopolization, and tying contracts. • Sherman Act of 1890—considered the cornerstone of antitrust legislation, had two major components: o “Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations is declared to be illegal.” o “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a felony” (later changed from “misdemeanor”). (McConnell, Brue & Flynn, 2012) The Sherman Act was created to prohibit practices such as price-fixing amongst competitors as well as monopolization. The act appeared to provide a solid base to combat against business monopolies, but early court interpretations limited the scope of the act and created ambiguities of the law. • Clayton Act of 1914—expanded upon and helped clarify the intent of the existing Sherman Act, with 4 major components: o Section 2 outlaws price discrimination when it isn’t justified on the basis of cost differences and when it reduces competition. o Section 3 prohibits tying contracts, where a producer requires that a buyer purchase another (or others) of its products as a condition for getting the desired good or service o Section 7 prohibits firms from purchasing stocks of competing compani... ... middle of paper ... ... 1971 to oversee industrial health and safety in the workplace, as well as conduct inspections and investigations to determine whether employers are complying with standards • The EPA (Environmental Protection Agency) was established in 1972 to oversee air, water, and noise pollution and to pass regulations to control actions that could cause them. • The CPSC (Consumer Product Safety Commission) was established in 1972 to oversee the safety of consumer products and holds the responsibility of protecting the American public from consumer products that have the capability of causing unreasonable injury or death. (McConnell, Brue & Flynn, 2012) Works Cited McConnell, C., Brue, S., & Flynn, S. (2012).Economics: principles, problems, and policies. (19 ed., p. 375-390). McGraw-Hill/Irwin. Retrieved from http://online.vitalsource.com/books/0077771699/id/L4-1-1

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