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5.6: Limited exemption from antitrust laws

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  • Many countries with market economies have laws designed to ensure certain fair business practices are followed. One practice is to prohibit restraints or attempts to monopolize trade or commerce by businesses. This includes investigation of mergers that might lead to restraints or possible monopolies of trade or commerce. Price fixing is one practice that is illegal. Because farmers are individual businesses, the formation of a cooperative to collectively set a price at which the cooperative might sell the members agricultural products was considered price fixing. Legislation such as the Capper-Volstead Act in the U.S. was created to enable cooperatives to engage in certain practices—to collectively market and bargain, set prices, cooperate with other cooperatives, create contracts with buyers and suppliers, or limit membership. Cooperatives have this exemption only if they have members who are agricultural producers, cannot engage in predatory pricing, and cannot attempt to create a vertical supply curve by engaging in practices to limit the supply of members’ products. These laws are unique to cooperatives. Baseball has a limited exemption from antitrust, and other industries have legal protections for manufacturer-imposed dealings or requirements contracts.