Operating a successful business often involves strategic decision-making around pricing, territories and partnerships. Business owners must be careful not to cross legal boundaries into anti-competitive behavior, which can lead to significant fines and damaged reputation.
It is easier than you think to make costly mistakes, so business owners should understand the basics of avoiding antitrust issues.
1. Understand the details
Develop a strong understanding of antitrust legislation such as the Sherman Act and Clayton Act. Be aware of what constitutes illegal practices, including price fixing, market division and bid rigging. The more you understand about the nuances of these classifications, the easier it is to reduce your risks.
2. Avoid collusion
Avoid making any formal or informal agreements with competitors to determine pricing, divide customers or geographic markets, limit production or rig bids. Such arrangements may qualify as violations of anti-trust laws, even if intentions seem collaborative rather than competitive.
3. Exercise caution when sharing information
While industry associations provide useful connectivity, be discerning about sharing competitively sensitive information. This includes pricing, profit margins, future business plans and terms with suppliers. What seems harmless may appear as anti-competitive coordination.
4. Document decision-making
Keep records demonstrating how you make any determinations on pricing, expansion plans and other competitive moves based on your own business goals and market factors. Such documentation shows decision autonomy in case anti-trust concerns arise.
By understanding regulations, avoiding collusion, judiciously sharing information and documenting decision rationale, business owners can strategically guide their company’s growth while steering clear of anti-competitive behavior.
