Is the Violation of Antitrust Laws in NC a Federal Offense?

Free and open markets define the foundation of a thriving economy. Our economic system encourages competition among sellers in an open marketplace. Antitrust laws are written to regulate competition among businesses and violations are considered white collar crimes. If you own a company and think another company’s trade practices have injured you, you may be interested in this topic. In North Carolina, is violating an antitrust law a federal offense? Our criminal federal lawyers in Raleigh, NC are experienced in this area of the law. In this article, we will discuss antitrust laws and whether they are a federal offense or a state offense.

What are Antitrust Laws?

Antitrust laws are regulations that encourage competition by limiting the market power of any one business. In order to limit competition, antitrust laws make sure that mergers and acquisitions don’t concentrate market power or create monopolies. These laws also require breaking apart companies that have become monopolies. When an antitrust law has been violated, it is typically considered a financial crime.

Additionally, antitrust laws prevent companies from colluding or forming cartels. A cartel is a group of independent businesses or companies that act together like a single company and control such things as prices, industry output, market shares, allocation of customers, allocation of territories, rigging bids, and division of profits. Antitrust laws can be federal or specific to each state, including North Carolina.

Key Federal Antitrust Laws

The Sherman Act, the Federal Trade Commission Act, and the Clayton Act are the key laws that set the groundwork for antitrust regulation. The first antitrust law was the Sherman Act, passed by Congress in 1890 as a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade.” In 1914, Congress passed two additional antitrust laws–the Federal Trade Commission Act creating the FTC and the Clayton Act. All three have had revisions over the years, however they are the three core federal antitrust laws still in effect today. The FTC’s Bureau of Competition, working together with the Bureau of Economics, is charged with enforcing the rules of the competitive marketplace.

North Carolina Antitrust Laws

Using the Sherman Act as the guide, North Carolina’s General Assembly passed laws in 1913 to limit monopolies and trusts. General Statute § 75-1 states that “Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce in the State of North Carolina is hereby declared to be illegal.” Violation of the statute is a criminal felony. 

Are Antitrust Laws in NC Governed by the State or Federally?

The three principal antitrust statutes mentioned above are federal laws. In addition to these federal statutes, most states have antitrust laws that are enforced by state attorneys general or private plaintiffs which are based on the federal statutes. Few legal actions are filed today under the state statute to regulate monopolies and trusts. Typically, those are handled through federal laws. However, in addition to regulating monopolies, N.C. law declares that “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce” are unlawful. This portion of the statute is not a criminal offense. Where N.C. uses its strength is in the civil remedy when an antitrust crime has occurred. 

How Does North Carolina Enforce State Antitrust Laws?

State attorneys general can play an important role in antitrust enforcement on matters of concern to local businesses or consumers. North Carolina can bring federal antitrust suits on behalf of individuals residing in the state or on behalf of the state as a purchaser. In merger investigations, a state attorney general may cooperate with federal authorities.

State attorneys general also may bring an action to enforce their state’s own antitrust laws. The Supreme Court has held that a state’s antitrust laws are not preempted by federal law. In fact, state laws may go beyond federal law in what is prohibited. However, North Carolina cannot punish conduct that takes place outside of the state.

Antitrust Violations Brought by Private Parties

Any person or business injured or destroyed by unfair or deceptive trade practices can sue the perpetrator. A large number of antitrust suits are brought by businesses and individuals who want treble (triple) damages for violations of the Sherman or Clayton Acts. Private parties can also seek court orders preventing anticompetitve conduct, called injunctive relief, or bring suits under state antitrust laws. Individuals and businesses cannot sue under the Federal Trade Commission Act.

To win on such a claim, a party must show the following:

  1. An unfair or deceptive act or practice, or an unfair method of competition
  2. In or affecting commerce
  3. Which proximately caused actual injury to the party or to the business.

If the injured party is awarded damages, the statute automatically trebles (triples) the damages. The statute even allows a judge to require the unsuccessful side to pay the attorney’s fees of the prevailing party.

North Carolina’s Statute

Unfair methods of competition and unfair or deceptive trade practices take many forms, therefore, North Carolina’s statute does not list all instances. Courts have held that the existence of unfair acts and practices must be determined from the circumstances of each particular case. Generally, acts are usually found to be unfair and deceptive when they offend established public policy or are:

  • Immoral
  • Unethical
  • Oppressive
  • Unscrupulous
  • Injurious

Whether of not the offender intended certain consequences or acted in either good or bad faith are irrelevant. Instead, the relevancy is what effect the conduct has on the consuming public.

Categories of Behavior

There is no exact list of unfair and deceptive acts because each case must be judged on its own facts. However, certain categories of behavior have been found to violate the state in past cases:

  • Fraud or misrepresentation in a commercial setting
  • Unfair and deceptive acts and practices in the insurance industry
  • Deceiving creditors to extend credit to an individual who is not creditworthy
  • Libeling or slandering someone else’s product or business activities
  • Situations in which competitors divide up a territory in order to minimize competition
  • Saying one’s goods are those of a competitor
  • Wrongful interference with another’s contracts
  • Systematic overcharging customers

In a Court Case, Who Determines Whether the Alleged Acts Were Committed?

In an ordinary unfair or deceptive trade practice case, the jury is responsible for determining whether or not the alleged act(s) was committed. After the determination is made, the court must decide as a question of law whether the facts constitute an unfair or deceptive trade practice.

Contact Sandman, Finn & Fitzhugh Today

If you think your business has been hurt through another party’s unfair trade practices or if you have been accused of committing a violation of an antitrust law, you should call our criminal attorneys today. We are experienced and knowledgeable of antitrust laws and can help you determine if you have a legal case. Our team will provide legal representation and guide you through the entire process. You need experts to fight for your rights! Call us and speak to an attorney 24 hours a day/ 7 days a week at (919) 845-6688. Or complete the contact form to speak to one of our attorneys today.