An years past, firms around the world have secretly engaged in collusive agreements to restrain production and push prices above competitive levels.

Evidence compiled by government officials investigating such agreements has revealed that conspiring firms often utilize similar methods of establishing and enforcing collusive restraints of trade. Most agreements, for instance, assign to each firm an allowed market share, a permitted region of operations, or an approved set of customers. In addition, participating firms commonly are required to exchange sales information so that they can monitor adherence to their agreements to restrain trade. In this chapter, you will learn why firms that typically utilize these techniques to formulate and maintain collusive agreements engage in secret conspiracies: Such agreements are illegal under U.S. antitrust laws.

Explain the main rationales for regulation of industries that are not inherently monopolistic

Competitive advantage denotes a business in which a large number of companies compete for comparable but still comparable goods.

The Justice Department compelled Dean Foods to exit from operating Waukesha plant at Wisconsin so that it stops operating as monopoly in bottling milk product in the upper Midwest. The objective of such policy action was to ensure fair competition and restriction of alleged anticompetitive trade practices in the bottling milk product market. The Justice Department thought by restricting anticompetitive practices, it would help increase the supply of bottling milk at lower price.

But unfortunately, the Justice Department failed to address its original concern.

In less than 16 months, the new company that bagged ownership of bottling plant at Waukesha, Wisconsin decided to close its operation as the plant experienced diseconomies of scale and as the long-run average cost remained too high to be covered by the market price of the milk. The employee base as large as 100 employees lost their jobs to make the matter further worse. The schools in the locality lost their constant supply of milk for children's lunch.

Thus, it can be observed that the attempts to check alleged anticompetitive practices have actually led to closing down of operations.