Law Assignment Help – Problem 2: Review these articles and do additional research on Price fixing

Law Assignment Help – Problem 2: Review these articles and do additional research on Price fixing

Law Assignment Help – Problem 2: Review these articles and do additional research on Price fixing

Law Assignment Help

Problem 2: Review these articles and do additional research on Price fixing

read chapter 10  page 437 ( sherman act)

http://www.citylab.com/politics/2015/09/la-restaurants-with-new-fair-pay-practices-stand-accused-of-price-fixing/403825/ (Links to an external site.)

http://laist.com/2015/09/02/price_fixing_los_angeles_restaurants.php (Links to an external site.)

Chapter 10: Problem # 2

Issue: Some of the restaurant owners in California are violating the Sherman Antitrust Act by

going against the rules that forbids the restraints of trade and forbids the attempts to monopolize

and conspiracies to monopolize.

Rule: The Sherman Antitrust Act of 1890 has two sections. Section 1 of the Act forbids restraints

of trade and Section 2 of the Act forbids monopolization, attempts to monopolize and

conspiracies to monopolize (p. 437). The federal government has two enforcement options:

1. Violation of the Sherman Act Opens Participants to Criminal Penalties: The corporate

fine that can be charged is up to $ 100 million per violation and individuals may have to pay a

fine up to $ 1 million and/or imprisonment for up to 10 years (p.437).

2. Injunctive Relief is provided under Civil Law: Any private body or the government may

get a court order that prevents the continuing violations of the act and afford appropriate relief.

The people who are harmed by the violation of the act can also bring a civil action and can seek

three times the actual damages that have been sustained (p.437).

Analysis: The Sherman Antitrust Act is meant for the protection of consumers and it promotes

fair competition. It also forbids acquisition of monopoly power and cooperative or joint restraints

of trade, for example it forbids “the business practices undertaken by two or more restaurants to

improperly stifle or suppress “competition on the merits” in a given market” (Parker, 2015).

Some restaurants in Los Angeles have been accused of price-fixing and monopolizing and are

facing a lawsuit. Restaurants like Melisse and Trois Mec, which are in the Los Angeles Area, are

facing a class-action lawsuit because of price-fixing with regards to a health care surcharge of 3

% that has been tacked onto the final bills (Trinh, 2015).

A few other restaurants are also named in the lawsuit because they got together with the owners

of the other restaurants and agreed to add a surcharge of 3 percent, which would go towards

paying for the health care of the employees. This is a violation of the Antitrust Law because it is

a conspiracy to raise prices.

The restaurants have argued that they are not involved in price –fixing and the surcharges are

being utilized for a good purpose- for the benefit of their employees, and therefore they are not

violating the Antitrust Act. They also claim that the patrons were clearly informed about the

surcharge and the way it would be used. They also informed the patrons that they could reduce

the tipping as they were paying the three percent surcharge.

Most of the patrons did not like the idea of paying the surcharge because they felt that it is the

duty of the restaurant owners to take care of the health care of their employees. The lawsuit that

has been filed against the restaurant owners clearly indicate that the owners of the restaurants

conspired together to monopolize the imposition of three percent surcharge on the patrons. This

practice is not meant to destroy the rivals, but it is definitely affecting the patrons and therefore it

is an act of monopolizing that can harm the patrons.

The lawsuit also claims that the restaurant owners conspired to restrain trade. The Sherman

Antitrust Act states clearly that it is unlawful for any businesses to conspire to restrain trade and

they can be punished severely if the claims are justified. Price fixing, market allocation, bid-

rigging and other kind of group boycotts are considered as offence and the per se violation of

Section 1 of the Sherman Antitrust Act (Parker, 2015).

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