I’ve heard that competing companies sometimes make agreements to fix prices and rig bids. Does Ohio law allow this?
No. In fact, the Ohio Valentine Act specifically prohibits agreements that restrain trade and hurt competition. Certain agreements among competitors, including agreements to fix prices, rig bids and allocate customers, suppliers or markets, are considered so harmful that the law prohibits them even if cannot be shown that the agreements did, in fact, hurt competition.
How do these agreements among competitors work, and why does Ohio law consider them to be so harmful?
As a general rule, when companies compete prices are reduced. Without competition, prices rise. Two competing companies may agree that they will only sell their competing products for a set price and not discount, or they may agree to coordinate their pricing in bidding for a particular job. Such agreements are viewed as anti-competitive because they result in higher prices for consumers.
Does the Ohio Valentine Act prohibit any other kinds of agreements among competitors?
Other agreements, which may or may not violate the Act, include exclusive dealing agreements, tying/bundling agreements (requiring a buyer to purchase two or more products together), information exchanges and reciprocal dealing arrangements. In determining whether such agreements violate the Act, an enforcement agency or Court will weigh the pro-competitive benefits of the agreement against its anti-competitive effects. If an agreement’s anti-competitive effects outweigh the pro-competitive effects, then it will be condemned.
What happens to those who violate the Valentine Act?
Companies and individuals who violate the Valentine Act may face both criminal and civil penalties. These can include three times the amount of the “damages” (the amount of money a court awards to the person or company harmed by the violation), substantial fines, forfeit or return of profits, repayment to victims and, in the case of an individual, possible jail time. Companies convicted of violating the Act may also be banned from doing business in Ohio.
Who enforces Ohio’s Valentine Act?
The Antitrust Section of the Ohio Attorney General’s Office enforces the Act. Private parties who are injured due to a violation of the Act may also bring a lawsuit in an Ohio state court for triple damages and attorneys’ fees.
What about monopolies? Does the Valentine Act prohibit companies from controlling the entire supply of goods or services in a certain market?
No. Unlike the more comprehensive federal Sherman Act, the Valentine Act does not prohibit this “single firm conduct.” So, an Ohio corporation may, on its own, monopolize, or attempt to monopolize, a market without violating the Valentine Act.
However, a federal law, the Sherman Act, does prohibit monopolization and attempts to monopolize, so an Ohio corporation that engages in such conduct may be violating federal law. For this reason, companies with substantial market shares need to be careful that they do not engage in conduct that makes it difficult if not impossible for smaller companies to compete.
How could a violation of the Valentine Act harm me as a consumer?
As a consumer, you may be harmed by antitrust violations in many different ways. For example, price fixing agreements likely will increase the price you’ll pay for a product. Market allocation and exclusive dealing agreements may limit the suppliers from whom you can purchase a product, which may reduce product offerings and raise prices. Tying/bundling agreements may require you to purchase a product you do not want so you can have access to the product you do want. Also, if competition among competitors is reduced, those companies may spend less on research and development, which often produces new and better product offerings.
How do I report a Valentine Act violation?
You may report potential violations of the Valentine Act online using the Antitrust Bid-Rigging Web Tip Form at http://www.ohioattorneygeneral.gov/Legal/Antitrust/Antitrust-bid-rigging-Web-tip-form. You may also report potential antitrust violations by phone to either the Attorney General’s Help Center (1-800-282-0515) or directly to the Ohio Attorney General’s Antitrust Section (1-614-466-4328).
This “Law You Can Use” consumer legal information column was provided by the Ohio State Bar Association (OSBA). It was prepared by Cincinnati attorney Jeanne M. Cors, a partner in the law firm of Taft Stettinius & Hollister LLP. Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek the advice of a licensed attorney.