Antitrust Practices and Market Power Essay Example | Topics and Well Written Essays - 1250 words

Antitrust Practices and Market Power - Essay Example Antitrust laws, often known as ‘competition laws’ are norms introduced by the government of U.S. to prevent the consumers from the negativities of rapacious pricing introduced by the potential business giants in market and thereby help in promoting free trading activities in the open economies. This essay will concentrate in the recent antitrust investigation against the giant web searcher Google. The Federal Trading Commission had introduced the antitrust inquiry against Google in October 2012 and recommended the government to completely sue the business giant. Such laws are generally incorporated over firms that exhibit monopolistic or oligopolistic characteristic features. In short, the imperfectly competitive market structures encourage the malpractices and bureaucracies of potential firms in almost all industrial segments. Antitrust investigation is the best combat against such ill practices. The issue of antitrust investigation against Google encompasses the online business industry (Lohr, 2012). Reason for Antitrust investigation against Google The Federal Trading Commission (FTC) augmented pressure in Google for an antitrust investigation and decided to sue the giant web searcher. The company was claimed to manipulate its search results in a way that would facilitate its own products and make the same difficult for its potential rivals in the industry. However, the officials of the company had announced to answer and prove its innocence against any charges imposed by the regulators. FTC has equipped itself with a team which would drag Google to the court if required. Beth A. Wilkinson was the legislator appointed by FTC to fight against Google in the court. The European Union Commissioner have also claimed that Google is monopolizing the online industry and forcing other specialized search engines and advertizes to foreclose their businesses. Google has also been accused for manipulating its e-commerce services results. It is also found tha t Google introduces lobbying affairs with smart phone makers and force them not to remove the Google android operating systems from their manufactured phones. The American Antitrust Institute (AAI) has also agreed to the claims of FTC made against Google. This case is a typical case of antitrust exploration that has been prerequisite because the firm concerned (Google) simply enjoys oligopolistic or monopolistic power in the digital market places (Cleland, 2013). Pecuniary and Non Pecuniary Cost due to Imperfect Competition The monopolistic and oligopolistic firms exist in markets where perfect competition does not exist. The firms in this type of a market structure are not ‘price takers’ but are ‘price makers’. There are a large number of buyers but only few sellers in such market structures. Thus, the existing producers in an imperfect market have power to discriminate the buyers both in social and economic grounds. The demand curve faced by these types o f firms is downward sloping in nature (W. Shepherd & J. Shepherd, 2003). Figure 1: AR and MR Curve of a Monopoly or Oligopoly Producer AR, MR Price or Average Revenue Curve (P or AR) Quantity Marginal Revenue Curve (MR) Antitrust behavior of the firms causes many economic and noneconomic costs. Imperfect competition in the market is responsible for inefficient allocation of resources, the monopolistic and the oligopolistic sellers often hoard their products to artificially increase the prices. Price discrimination is also one of the mal practices