Protecting consumers by promoting competition

This is National Consumer Protection Week, a week set aside every year to help consumers know their rights and make well-informed choices in the marketplace.

Here at the FTC, we’re all about protecting consumers. One way we do this is by enforcing the antitrust laws. Competition is the fuel that drives America’s free-market system. But competition can only thrive if firms respect the antitrust laws, which are the rules of the free market. When businesses break those rules—such as by agreeing to fix prices—they effectively steal from consumers and harm the economy.

The FTC supports free and open markets by protecting competition, so that consumers reap the benefits of a vigorous marketplace: lower prices, higher quality products and services, and greater innovation. Enforcing antitrust rules also allows businesses to compete on the merits, powers economic growth, and eliminates impediments to economic opportunity.

Here are a few examples of how the FTC protects consumers by enforcing the antitrust laws.

Prevent mergers that harm consumers. The FTC reviews mergers to ensure that they will not lead to higher prices by eliminating an important competitor. For instance, the FTC stopped a merger between the country’s two largest foodservice distributors that could have led to higher food costs at restaurants and cafeterias around the country.

Stop business practices that keep prices high. Any competition can produce winners. That is why a firm can lawfully become a monopolist by offering a superior product, better service, or more attractive prices than its rivals. But it is illegal for a monopolist to stop challengers from entering the market with lower-priced products. Last month, for example, the FTC required the monopolist of a critical drug used to treat sick babies to divest the rights to develop a competing drug. The FTC alleged that the company had acquired the rights just to keep any other company from developing a lower-cost drug. The company also paid $100 million dollars in ill-gotten profits.

Promote economic opportunity. Looking for a new job can be stressful, but the last thing a job-seeker should have to worry about is a back-room deal among employers that would keep her from getting the job of her dreams or from being offered a competitive salary. As the FTC explained last year, the antitrust laws apply to job markets, and agreements among employers that would fix wages or other terms of employment for workers are illegal. Also, the FTC recently formed a task force on economic liberty to broadly examine the increase in occupational licensing regulations that may limit job opportunities, especially for low-income workers and military families who move frequently. Overly broad occupational licensing can limit employment opportunities for individuals moving to a different state, or prevent them from using vocational skills to open a new business.

Track emerging trends and innovative products. The FTC also holds workshops to bring together industry experts, consumer groups, and other stakeholders to share ideas and knowledge about new products or business models that could benefit consumers. Whether it’s home-mounted solar panels or self-driving cars, the FTC studies emerging trends to ensure that consumers are protected and competition flourishes in these new markets. In April, the FTC will host a workshop to examine how more competition and innovation might help consumers who need hearing aids, and the event will be webcast.

If you have a question about the antitrust laws or a concern about business behavior, read the FTC’s Antitrust Guide, or contact the Bureau of Competition at antitrust@ftc.gov.