COMPETITION 

COUNTS

HOW CONSUMERS WIN WHEN BUSINESSES COMPETE

FEDERAL TRADE COMMISSION
THE FTC’S BUREAU OF COMPETITION: PROTECTING FREE 

ENTERPRISE AND AMERICAN CONSUMERS

What if there were only one grocery store in your community? What if you 

could buy a phone from only one retailer? What if only one dealer in your 

area sold cars?

Without competition, the grocer may have no incentive to lower prices. 

The phone shop may have no reason to oer a range of choices. The car 

dealer may have no motivation to keep its showroom open at convenient 

hours or oer competitive financing.

Competition in America is about price, selection, and service. It benefits 

consumers by keeping prices low and the quality and choice of goods 

and services high. Competition also encourages businesses to oer new 

and better products.

Competition makes our economy work. By enforcing antitrust laws, the 

Federal Trade Commission helps to ensure that our markets are open 

and free. The FTC promotes free and open competition and challenges 

anticompetitive business practices to make sure that consumers have 

access to quality goods and services at competitive prices, and that 

businesses can compete on the merits of their work. The FTC does not 

choose winners and losers – you, as the consumer, do that. Rather, our 

job is to make sure that businesses are competing fairly within a set 

of rules.

Through its Bureaus of Competition and Economics, the FTC puts 

its antitrust resources to work, especially where consumer interest 

and spending are high: in matters aecting energy, health care, food, 

pharmaceuticals, professional services, computer technology and 

databases, medical devices, and funeral services.
WHAT IS ANTITRUST?

The word “antitrust” dates from the late 1800s, when powerful companies 

dominated industries, working together as “trusts” to stifle competition. 

Thus, laws aimed at protecting competition have long been labeled 

“antitrust.” Fast forward to the 21st century: you hear “antitrust” in news 

stories about competitors merging or companies conspiring to reduce 

competition.

The FTC enforces antitrust laws by challenging business practices that 

could hurt consumers by resulting in higher prices, lower quality, or 

fewer goods or services. We monitor business practices, review potential 

mergers, and challenge them when appropriate to ensure that the market 

works according to consumer preferences, not illegal practices.

What kinds of business practices interest the Bureau of Competition? 

In short, the very practices that aect consumers the most: mergers, 

agreements among competitors, restrictive agreements between 

manufacturers and product dealers, and attempts by monopolists to 

thwart new competitors. The FTC reviews these and other practices, 

looking at the likely eects on consumers and competition. We ask: 

Would they lead to higher prices, inferior service, or fewer choices for 

consumers? Would they make it more dicult for other companies to 

enter the market?

“Antitrust laws...are the Magna Carta of free 

enterprise. They are as important to the 

preservation of economic freedom and our 

free-enterprise system as the Bill of Rights is 

to the protection of our fundamental personal 

freedoms.”

U.S. Supreme Court Justice Thurgood Marshall

United States v. Topco Associates, Inc., 

405 U.S. 596, 610 (1972).
HERE ARE SOME BUSINESS PRACTICES THE 

FTC MONITORS:

Mergers

Many mergers benefit consumers by allowing firms to operate more 

eciently. Other mergers, however, may result in higher prices, fewer 

choices, or lesser quality. The challenge for the FTC is to analyze the 

likely eects of a merger on consumers and competition – a process that 

can take thousands of hours of investigation and economic analysis. In 

one FTC case, a major baby food maker wanted to buy one of its two 

competitors. Based on evidence that the merger would lead to higher 

prices for consumers, the FTC went to court and successfully blocked the 

deal.

Agreements Among Competitors

It’s illegal for business rivals to act together in ways that can limit 

competition, lead to higher prices, or hinder other businesses from 

entering the market. In one FTC case, a group of auto dealers threatened 

to stop advertising in a newspaper if it printed money-saving tips for 

car shoppers. The FTC challenged the dealers because it is illegal 

for businesses to act together in ways that can deprive consumers of 

important information about products they want to buy.

Agreements among business rivals about price or price-related matters 

like credit terms are among the most serious business practices the 

Competition in America is about price, 

selection, and service. It benefits consumers 

by keeping prices low and the quality and 

choice of goods and services high.
FTC considers. That’s because price is usually the principal basis for 

competition and consumer choice. Price fixing – companies getting 

together to set prices – is illegal. But that does not mean that all price 

similarities, or price changes that occur about the same time, are the 

result of price fixing. On the contrary, they often result from normal market 

conditions. For example, prices of commodities such as wheat are often 

identical because the products are virtually identical, and the prices that 

farmers charge all rise and fall together without any agreement among 

them. If a drought causes the supply of wheat to decline, the price to 

all aected farmers will increase. Uniformly high prices for a product in 

limited supply also can result from an increase in consumer demand: Just 

ask any shopper hunting for a “must have” children’s toy.

Agreements Between Manufacturers and Product Dealers

Many “package deals” create eciencies that are beneficial to 

consumers: for example, automobile dealers sell tires with their cars 

because it makes sense. You might prefer a dierent kind of tire, but 

shipping and selling cars without tires is not practical. On the other hand, 

some “tie-in” agreements are illegal because they restrict competition 

without providing benefits to consumers. For example, the antitrust laws 

likely would not permit a drug manufacturer to require customers to buy 

a patient monitoring system they don’t want along with the prescription 

drugs they do want.
Monopoly

A monopoly exists when one company controls a product or service in 

a market. If a company gains a monopoly because it oers consumers a 

better product at a better price, that’s not against the law. But if it creates 

or maintains a monopoly by unreasonably excluding other companies, 

or by impairing other companies’ ability to compete against them, that 

conduct raises antitrust concerns. For example, a newspaper with a 

monopoly in a small town could not refuse to run advertisements from 

businesses that also advertised on a local television station.

Other Anticompetitive Conduct

Business strategies that reduce competition may be illegal if they lack 

a reasonable business justification. For example, a pharmaceutical 

company’s exclusive contracts with suppliers of a key ingredient kept 

generic drug makers from getting that ingredient. Without competition 

from generics, the pharmaceutical company was able to raise prices 

3,000 percent: a $5 prescription would have cost consumers $150. The 

FTC, 32 states, and the District of Columbia challenged the contracts, 

which resulted in a $100 million court settlement for injured consumers.

The FTC enforces antitrust 

laws by challenging business 

practices that could hurt 

consumers by resulting in 

higher prices, lower quality, or 

fewer goods or services.
KEEPING MARKETS COMPETITIVE

By challenging anticompetitive business practices, the FTC helps to 

ensure that consumers have choices in price, selection, and service. To 

learn about competition problems, the FTC often receives information 

from consumers like you. If you suspect illegal behavior, please notify the 

FTC or your state’s Attorney General (visit naag.org).

CONFIDENTIALITY

The FTC cannot act on behalf of an individual consumer or business, but 

the information you provide can help expose illegal behavior.

With few exceptions, FTC investigations are not public. If you ask us 

about an investigation, you may be told that we cannot discuss it, or even 

confirm or deny its existence. But we can receive your information and 

make sure it gets to appropriate FTC sta.

HOW YOU CAN HELP

If you have an antitrust problem or complaint, or if you wish to provide 

information that may be helpful in an investigation, contact the FTC.

E-mail: antitrust@ftc.gov

If you wish to submit confidential information, send it by mail and mark it 

“Confidential.”

Mail: Federal Trade Commission 

Bureau of Competition-H374 

Washington, D.C. 20580

Telephone: 1-202-326-3300
Federal Trade Commission

Bureau of Competition

Washington, D.C. 20580

FTC.gov

MAY 2015