Legal Definitions - anticompetitive conduct

Anticompetitive conduct refers to actions taken by businesses that are designed to unfairly reduce or eliminate competition within a market, rather than to improve their own products or services. These actions ultimately harm consumers by limiting choices, increasing prices, or stifling innovation, and they lack a valid, non-competitive business justification.

Here are some examples:

• Price Fixing: Imagine two major smartphone manufacturers secretly agreeing to sell their new flagship models at the exact same high price point, rather than competing to offer better deals to consumers.

  This illustrates anticompetitive conduct because the manufacturers are not competing on price, which is a fundamental aspect of a healthy market. Their agreement to fix prices removes consumer choice and forces buyers to pay an inflated amount, with no legitimate business purpose other than to avoid competition and maximize profits at the expense of the public.

• Predatory Pricing: Consider a large, established online retailer entering a new market for handcrafted jewelry and selling items at prices significantly below their own cost for an extended period, specifically to drive smaller, independent artisans out of business.

  This is an example of anticompetitive conduct because the retailer's primary goal is not to offer a better product or more efficient service, but to eliminate competition by sustaining losses that smaller businesses cannot match. Once the competitors are gone, the retailer can then raise prices without fear of competition, ultimately harming consumers by reducing their options and potentially increasing future costs.

• Exclusive Dealing: A dominant software company that controls a widely used operating system requires all computer manufacturers who want to pre-install its operating system to also exclusively pre-install its less popular web browser, prohibiting them from offering any competing browsers.

  This demonstrates anticompetitive conduct because the software company is leveraging its power in one market (operating systems) to unfairly gain an advantage in another market (web browsers). This practice makes it extremely difficult for other browser developers to compete, even if their products are superior, thereby limiting consumer choice and innovation in the browser market without a legitimate business justification related to product quality or efficiency.