Federal Law on Illegal Monopolist

The federal government regulates oligopolies through antitrust law enforcement. The acquisition of Unobtainium Corporation of Georgia by Adamantium Corporation of Alabama must not violate antitrust laws. Three main antitrust laws prohibit business practices that deprive local consumers of competitive market benefits. The market structure of Adamantium is an oligopoly. The penalties for violating the Sherman Act include a fine of up to $100 million and 10 years in prison.

Running Head: FEDERAL LAW ON ILLEGAL MONOPOLIST 1
FEDERAL LAW ON ILLEGAL MONOPOLIST
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The federal government in the United States plays a very crucial role to regulate some of
the activities of oligopolies, mainly through the antitrust law enforcement. So, in its attempts to
acquire the Unobtainium Corporation of Georgia (UCG), Adamantium Corporation of Alabama
(ACA) will have to ensure that the motives behind the step don’t violate the antitrust laws of the
country (Edlin, Hemphill & Kaplow, 2015). It is likely to be taken as an illegal activity which
may have legal consequences if the contract between the two corporates, their combination or
conspiracy is against the trade legislations or have negative motives like exploiting consumers.
There will be three main Federal antitrust laws implicated in this scenario and which will
be essentially prohibiting some of the business practices which the two corporates might be
unreasonably targeting to deprive local consumers of their benefits of competitive market and
benefit the monopoly. Such benefits include but not limited to low prices and quality products.
The three laws are the Sherman Antitrust Act, Clayton Act, and the Federal Trade Commission
Act (Federal Trade Commission, 2015).
The first standard to be considered when assessing the market power of these two
corporates before they can be allowed to merge is whether their contract, combination, and
conspiracy might result into unreasonable restrain on both interstate and the foreign trade. The
second standard in this assessment will be evaluating whether the merger or the acquisition
might lessen the market competition (Federal Trade Commission, 2015). The third standard will
be evaluating whether the merger might result in unfair competition within the market.
In the Adamantium market, the market structure is an oligopoly. This is in consideration
of the fact that this market is dominated by a small number of firms’ hence limited competition.
If the two firms succeed in colluding to form a cartel, they will then try and fix the prices at a

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level that maximizes the profits for the whole industry. They are also expected to set quotas in
order to keep their output at the profit maximizing level. This market structure can be elaborated
using the graph below (Federal Trade Commission, 2015):
In accordance to Sherman Act, if the monopolist will be proved illegal, a penalty of up to
$100 million will be imposed along with 10 years in prison to the owners of the companies
(Edlin, Hemphill & Kaplow, 2015).

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References
Edlin, A., Hemphill, S., & Kaplow, L. (2015). Professors Update 2015, Antitrust Analysis.
Federal Trade Commission. (2015). The antitrust laws. Repéré à: https://www. ftc.
gov/tipsadvice/competition-guidance/guide-antitrust-laws/antitrust-laws.