When Marketing Practices Raise Antitrust Concerns

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Although most U.S. businesspeople know better than to sit down with competitors to fix prices or divide markets, they can still violate antitrust rulings. Increasingly, the government agencies that enforce antitrust laws are scrutinizing organizations' marketing, and shifts in practices in the early 2000s have reinvigorated enforcement activity. Understanding what behavior raises antitrust flags is critical for companies with dominant market share in one or more product categories. There has been increasing scrutiny of shelf-slotting practices and category management in the retail sector, for example.

In this article, the authors take managers through the process of determining antitrust violation and then lay out five important cases in which practices that seemed to fit with competitive norms or with good citizenship, in fact, were ruled to be breaches of antitrust law — in some cases, with momentous penalties.

The article goes on to describe a sampling of the tactics that can help to temper competitiveness with caution. It concludes that a fundamental requirement is for managers to begin looking at their competitive tactics — and at the business strategies and processes that support those tactics — through the eyes of antitrust regulators.

Darren Bush is assistant professor of law at the University of Houston, Houston, Texas. Betsy D. Gelb is professor of marketing and entrepreneurship at the Bauer College of Business, the University of Houston. Contact the authors at dbush@central.uh.edu and gelb@uh.edu.

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