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Oligopoly

In: Business and Management

Submitted By ocean12
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According to the information provided for the June 2013 case, American Express Company, et al., Petitioners v. Italian Colors Restaurant et al., an agreement to resolve disputes with the company by arbitration was made between the credit card company and the merchant. However, the company did not have any right to arbitrate any claim “on a class action basis”. Despite the agreement, the merchant filed a class action, which claimed that petitioners violated §1 of the Sherman Act. They were seeking treble damages for the class under §4 of the Clayton Act. The merchant claimed that American Express Company charged merchants a rate 30% higher than fees charged for competing cards. Due to the company’s monopoly nature of business, merchants were forced to accept these rates. The lawsuits were dismissed by the District Court after the merchant countered the move to individual arbitration under the Federal Arbitration Act (FAA). The cost to prove the antitrust claims would have exceeded the maximum recovery for such a move, on the merchant’s part. (AMERICAN EXPRESS COMPANY, ET AL., PETITIONERS v. ITALIAN COLORS RESTAURANT ET AL., 2013)
In the case described above, oligopoly or monopoly-like companies can be viewed negatively because it shows that they take advantage of how much power they have over the general population surrounding their business. However, they may not always be bad for customers. Since oligopoly market structure is made of just a few companies, customers can easily conduct price comparisons between the few companies. Additionally, oligopoly companies conduct research on each other to effectively compete for customers. Many times, this competition leads to “price-matching” with each other. Again, customers win in this scenario. Monopolistic companies are beneficial to society, as well. With its almost endless profits, they are able to fund great projects

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