Which of the following is an example of a violation of antitrust laws

• A. A firm engaging in aggressive price competition against a rival
• B. A firm engaging in price discrimination that varies by customer segment
• C. A merger between firms to gain efficiency
• D. Engaging in collusive behavior to restrain competition

Answer: (D)

Antitrust laws aim to keep markets competitive by prohibiting agreements and practices that restrain trade. A clear violation is when firms collude to restrain competition, such as secretly agreeing on prices, limiting who sells in which markets, or rigging bids. This kind of coordinated behavior removes competition and hurts consumers through higher prices and less choice, so it’s illegal under antitrust statutes.

In contrast, aggressive price competition is a normal competitive tactic meant to attract customers and gain market share; it isn’t illegal by itself. Price discrimination can be legal in many cases, depending on how and why prices differ among customers. Mergers can be permissible if they’re unlikely to lessen competition meaningfully and may even bring efficiency, though some mergers are scrutinized or blocked if they threaten competition.