Precision Parts Corporation and Quality Gears

Antitrust law in the United States is a multiple-state legislation that regulates the performance and organization of the business incorporation which promotes a fair competition for the benefit of consumers.

Antitrust law in the United States is a multiple-state legislation that regulates the performance and organization of the business incorporation which promotes a fair competition for the benefit of consumers. More of this information was written with professional term paper help https://essaysworld.net/professional-term-paper-help First, these laws inhibit the creation of a monopoly and also abuse the monopoly power. Second, it prevents the creation of cartels. Furthermore, it ensures that each company earns its profit by offering quality products at affordable prices Third, this law restricts the fusion and accession of organizations that could not be competitive. This paper discusses the two competing companies, Quality Gears and Precision Parts Corporation selling machine parts. Due to unattainability in their geographical market affecting their profit margins, they agreed that Quality Gears will not sell their products in North and South Dakota while the Precision Parts Corporation will attempt the same strategy in Minnesota.

The agreement that the two companies, Quality Gears and Precision Parts Corporation made violated the law of antitrust legislation. Due to inability to attain their geographical market to all states they made the deal leading to monopoly or abuse of the trust to the areas which they agreed to sell their products to. It resulted in a production of low-quality machines which did not meet the customer’s expectation. Fair competition is an essential tool in business since it facilitates the offering of the best services to consumers. The companies refused from delivering some services such as promotions and free delivery because no other competitors in the area would challenge them. 

The violation of the third law encouraged the fusion and accession of uncompetitive organizations. The two companies would compete in the market and by doing this they would put more effort in providing high-quality, reliable, and durable machines. It also encouraged the cartels who claimed to be restraint of trade. It would lead to an increment of the machines price. Dividing the two companies by type of customers rather than geographic locations would not bring the same results because Quality Gear’s consumers are not only located in Minnesota or it may not have a one single client in South and North Dakota.

Precision Parts Corporation’s customers are not located only in North and South Dakota but also reside in Minnesota and other areas. It would have brought unfairness in the market since the two companies would not have met their maximum targets. Customers are located in every part of the states and due to customer’s tastes and preferences it would not be fair at all. Additionally, it would affect their companies because doing this reduced their market shares in the states which would also affect their profit targets. Their employers would be significantly affected since it would result in a closure of the trading branches in some areas and subsequent layoffs.

In conclusion, antitrust law is a basic act which facilitates fairness in business operations by protecting every firm and ensuring excellent services offered to customers. Organizations which may be greatly affected are encouraged to take actions in courts to enforce antitrust law. Violation of these laws attracts the court imposed penalties to the organization according to its size. Private parties who suffer an actionable loss may claim compensation as well.