104 MODULE 22 FEDERAL SECURITIES ACTS AND ANTITRUST LAW

2. Must be complied with in addition to federal laws

3. Exemptions from federal laws are not exemptions from state laws
4. Antitrust Law
5. The main purpose of federal antitrust laws is to promote the production and distribution of goods and
services in the most economical and efficient manner by preserving free, competitive markets
a. Also promotes fairness and gives consumer a wider choice
6. Regulation (for our concerns) is by federal law, so interstate commerce must be affected before the ac-
tivity is regulated
7. If there is a substantial economic effect on interstate commerce, then by court decisions
federal
law governs
(1) Even if a business is only carried on within a state, it may substantially affect interstate com-
merce if it ' .
(a) Competes or deals with businesses that do business among several states, or
(b) Purchases or sells a substantial amount of products that come from or wind up in interstate
commerce
EXAMPLE: Wholesale dealers in a state agree to divide the state market among them. This agreement
is intrastate but it reduces the chances for out-of-state dealers to enter the local market and therefore the
agreement affects interstate commerce.
8. If the contract in restraint of trade is illegal, it is unenforceable by the parties, in addition to possible
criminal or civil penalties and injunctions
9. Vertical restraints are agreements between parties from different levels of the distribution chain
(i.e., between manufacturer and retailer)' .
10. Horizontal restraints are agreements between parties of the same level of the distribution
chain
(i.e., between two restraints or two manufacturers)
11. Some contracts in restraint of trade are legal and enforceable
12. Seller of a business agrees not to compete with the buyer
(1) Only valid if for a reasonable time and a reasonable geographic area and if a proper business
interest is sought to be protected
(a) Reasonable time is what is fair under the circumstances to protect buyer (e.g., one year)
(b) Reasonable area would be where the business is conducted (e.g., neighborhood). Ifbusi-
ness is statewide, then restriction can be for whole state
EXAMPLE: Seller of a bakery covenants not to compete in the immediate locality for one year. This is a
reasonable area and also a reasonable length of time.
13. Similarly, partners and employees can covenant not to compete with partnership or
employer
while relationship lasts and for a reasonable time thereafter and within a reasonable area
14. Buyer or lessee of property may covenant not to use it in competition with, or to the injury of
the
seller or lessor
(1) Same standards of reasonableness apply
15. Exceptions to the 'antitrust laws
16. Labor unions unless they join with nonlabor group and act in violation
17. Patents are a twenty-year monopoly; fourteen years for design patents
18. Copyrights are a monopoly for the author's life plus seventy years
(1) For publishers, 95 years after publication or 120 years after creation
19. Trademarks are a monopoly with an indefinite number of renewals if still used
20. Insurance business that is covered by state regulations
21. US exporters may cooperate to compete with foreign entities
22. State allowed to have quotas on oil marketed for interstate commerce