How antitrust policy fosters competition

WASHINGTON - From busting up John D. Rockefeller's Standard Oil Trust in 1911 to going after Microsoft Corp.'s use of its Windows monopoly, antitrust policy has been an important element of the federal government regulatory landscape.

Now, in a tough recession, the Obama administration is swinging back the pendulum, maintaining that lax enforcement during the last decade has worsened economic woes and hurt consumers by failing to protect business competition.

What are antitrust laws, and how can such government policies affect business and the economy? Here are some questions and answers.

Question: What is antitrust? What does it mean, and what is its purpose?

Answer: Antitrust laws are designed to prevent combinations of companies that would boost their dominance in a market so much that it could hurt competition and, by extension, consumers. The harm might involve higher prices or fewer product choices.

Q: How does enforcement work?

A: Antitrust policies, administered by the Justice Department and the Federal Trade Commission, can ban proposed mergers of companies or put conditions on them, especially requiring some assets of the combined company to be sold off.

That happened amid the financial crisis late last year when the Justice Department allowed PNC Financial Services Group Inc.'s $5.6 billion buyout of National City Corp. - but said PNC must sell 61 branches of Cleveland-based National City. Regulators also police the market behavior of big combined companies, checking for cutthroat practices that reduce competition.

Q: How does the government decide whether a merger would hurt competition?

A: The regulators use market analysis done by experts at the federal agencies, plus a lot of legal precedents.

The Sherman Act of 1890 provides two brief sections prohibiting combinations or conspiracies that restrain or monopolize commerce. Add to that a century of rulings that have generated a body of antitrust law in the United States - plus precedents in Europe, Asia, and elsewhere - and you get a sense of the complex nature of antitrust cases.