To understand what "antitrust" law is, it helps to start with what is meant by a "trust." In the late 1800s, the famous businessman John D. Rockefeller put a number of far-reaching companies he owned under the control of the same group of "trustees" to organize the disparate businesses and gain more centralized control. Many large companies adopted this "trust" system in the late 19th and early 20th centuries, and the term "trust" came to be used to refer to these large companies or groups of companies. Among the various advantages of this type of business organization, the companies often controlled the market for a particular product all the way from manufacturing to distribution and ultimate purchase by the consumer. This market dominance allowed these companies to drive competitors out of business and raise prices for consumers when there was no one left to compete with them. There were famous trusts in the oil, steel, and tobacco industries, to name a few.
Designed to alleviate the economic hardships imposed on consumers when these trusts misused their market power, "antitrust" laws were created to prevent business practices used to decrease competition in the economic marketplace. By preserving competition, antitrust law is designed to help consumers by encouraging companies to compete for our business with better products and lower prices. Today, state and federal laws continue to help ensure a competitive economy and prevent unfair trade practices.
Common violations include Bid Rigging, Price-Fixing, Monopolization, and Resale Price Maintenance.
Bid Rigging occurs when competitors enter into an agreement that will result in a pre-determined winner when bidding for a contract is taking place. Competitors may agree to bid at a certain price so that the other competitor will win, or a contract may be tailored so that a certain company is pre-determined to win a future bid. Both activities are illegal.
Price-fixing is one of the most common ways people and businesses violate antitrust laws. Price-fixing occurs when competitors agree on how much they will charge for a product or service. Just because many competitors seem to be charging the same price for a product or service does not necessarily mean they are illegally fixing prices. Prices are often based on market conditions, and even though a competitor may raise or lower a price based on what someone else is charging, that does not mean the two competitors agreed to charge a certain price. This happens a lot among competing gasoline stations, for example, as the stations may raise or lower their price because they saw the station across the street do the same. Unless the two stations entered into an agreement to charge the same price for gasoline, this practice is not illegal.
A "monopoly" is a large company that has control over most, if not all, of a product or service in a particular industry or geographical area. "Monopolization" is the process by which a monopoly is created or maintained. With this power the competitor may completely control a market price and exclude any competitors, which usually results in an increase in price to consumers. It is not necessarily illegal to be monopoly -- sometimes, monopolies are economically efficient and do not harm consumers. It is also not necessarily illegal to become a monopoly -- a company can build a unique product that dominates a market just because it is a better product, and not because the company took any illegal steps to become a monopoly. However, companies sometimes take steps to obtain or maintain a monopoly that are illegal.
Resale Price Maintenance is a term used to describe an arrangement in which a manufacturer may require a store to sell their product at a specific price. If the store sells the product at a price below that required by the manufacturer, the manufacturer may decide that store will not be allowed to sell their product anymore. Arrangements like this used to be illegal per se -- that is, if a manufacturer put such a restriction on a store, it was automatically illegal. However, recent decisions from the U.S. Supreme Court indicate that these types of arrangements should be examined on a case by case basis, to determine if the arrangement will harm consumers.
Even though it seems like mergers just allow big companies to get bigger and charge consumers more, mergers can often be good for consumers and the economy. This is because the merged company often becomes more efficient, which allows the merged company to offer services to consumers at a lower price than if the two companies remain separate. In addition, sometimes companies have a hard time operating independently, but if two companies merge, the bigger company may become stronger.
Other times, mergers can make markets less competitive, and this harms consumers by reducing choice and increasing prices. When a merger is announced, federal and state authorities "review" the merger very carefully to make sure competition is not reduced. For example, federal and state authorities may look at how much of a market the merged company will control, and if the merged company will result in less competition nationally, within a specific state, or even within a specific city. If federal or state authorities think a merger may reduce competition and harm consumers, they may ask the merged company to sell parts of the company to a competitor (just to keep the market competitive). Sometimes, federal or state authorities can sue to stop or reverse a merger.
The Attorney General's role is to protect the citizens of the State of Michigan by enforcing state and federal antitrust laws. The Attorney General investigates possible violations, fights unlawful business practices, and encourages compliance with consumer protection and antitrust laws. The Attorney General often works with Attorneys General of other states and with the federal government to investigate and prosecute violations of state and federal antitrust laws. Sometimes, the Attorney General also works with other states and the federal government to make sure that mergers will not reduce competition and harm Michigan consumers (please see the answer to Question #3, above).
Federal government officials enforce federal antitrust laws. The U.S. Department of Justice and the Federal Trade Commission both conduct investigations and bring enforcement actions if they think there may be a violation of federal antitrust law. Both organizations review mergers to make sure they are not anti-competitive, investigate possible antitrust violations, and bring civil actions against companies or individuals that violate antitrust laws. The Department of Justice also brings criminal cases against individuals or companies for "serious and willful" violations of antitrust laws.
Disclaimer: The following should not be construed as legal advice, or a binding legal opinion from the Department of Attorney General. The information provided is intended only as informal guidance regarding general issues related to franchise investments in the State of Michigan. The Attorney General's Office cannot provide you with legal advice or interpretations of statutes. Questions about your compliance with state and federal franchise laws, rules, and regulations should be directed to your attorney.
1. What is a franchise?
McDonalds, Burger King, and Dunkin Donuts are three popular franchise operations. The Michigan Franchise Investment Law defines a "Franchise" as follows:
445.1502(3) "Franchise" means a contract or agreement, either express or implied, whether oral or written, between 2 or more persons to which all of the following apply:
A franchisee is granted the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor.
A franchisee is granted the right to engage in the business of offering, selling, or distributing goods or services substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate.
The franchisee is required to pay, directly or indirectly, a franchise fee.
A franchisor is the person who sells the franchise while a franchisee is the person who buys and operates the franchise.
2. How can I find out who owns a franchise?
Franchisees are not required to register with the Department of Attorney General, Franchise Section. You may try contacting the county clerk's office and ask for city tax rolls to find out who pays taxes at that property.
1. What do I have to do before selling franchises in the State of Michigan?
In general, franchisors must register with the Department of Attorney General, Franchise Section, prior to offering or selling franchises in the State of Michigan. This registration is referred to as a "Notice of Intent." The Notice of Intent should be typed on the franchisor's letterhead and the correct format to be used is as follows:
It is helpful if the franchisor also includes a brief description on the type of business they will operate in the Notice of Intent.
A check in the amount of $250.00 payable to the State of Michigan must accompany the Notice.
2. What information is required in Franchise Disclosure Documents in the State of Michigan?
The Michigan Department of Attorney General, Franchise Section, does not review franchise disclosure documents (FDDs) for compliance with state or federal law. Michigan is a "notice only" state, meaning the law only requires that franchisors register with the Attorney General once a year if they wish to offer or sell franchises in the State of Michigan.
A copy of the Michigan Franchise Investment Law (MFIL) MCL 445.1501 et seq. can be found on the Michigan Legislature website. The Michigan Administrative Code related to the Michigan Franchise Investment Law can be found on the Michigan Department of Licensing and Regulatory Affairs, Michigan Administrative Code website.
Franchisors should do their best to comply with both federal and state laws regarding disclosures. The Federal Trade Commission (FTC) has published helpful guidance on how to comply with their amended FTC Franchise Rule. The FTC's Franchise Rule Compliance Guide can be found on the FTC's Business Center website.
3. What about the Michigan disclosure page?
Michigan does not review FDDs, and the Attorney General's Office cannot provide you with legal advice. You should do your best to comply with state and federal law, and section 8, paragraph 3 discusses placement of the Michigan disclosure page. Page 26 of the FTC's Franchise Rule Compliance Guide also discusses suggestions on how to comply with both state and federal disclosure requirements.
4. Do I have to re-register to sell franchises in the state of Michigan after July 1, 2008?
No. Michigan law only requires registration once a year. If you are already registered to sell franchises, that registration lasts for one year. If you are not registered to sell franchises, and you wish to offer or sell franchises in the state of Michigan, you must register
1. How do I know if a franchisor is registered to sell franchises in the State of Michigan?
To check if a franchisor is currently registered to sell franchises in the State of Michigan, you may call 517-335-7567 and provide the name of the franchisor.
2. How do I know if a franchise is a good investment?
The Attorney General's Office does not endorse any franchisor, and we cannot provide you with legal, business, or financial advice. If you would like to check on a franchisor's complaint history (that is, the number of complaints on file with the Consumer Protection Division, Franchise Section), you may call 517-335-7567 and ask if there are any complaints on file about a particular franchisor.
For some additional tips on how to shop for a franchise, you may wish to refer to the Michigan Guide for Prospective Franchisees (PDF) or the FTC website.
In most cases, if you have a complaint about auto repairs, you should contact the Secretary of State, Bureau of Regulatory Services at 888-767-6424. For more information on what you should do if you have a complaint regarding auto repair, please visit the Secretary of State’s website.
If you would like help mediating a complaint with your credit card company, you may file a complaint online with Attorney General's Consumer Protection division. If any questions, call the Consumer Protection division toll-free at 877-765-8388 or 517-335-7599.
National banks are regulated by the federal Office of the Comptroller of the Currency (OCC). For more information about the OCC, or to get more information about credit cards and complaints about credit cards, please visit their website.
In general, unless a merchant gives the right to cancel in a contract, you do not have a right to cancel. There are some limited exceptions. For example, in the case of defective, damaged, or undelivered goods, you may be able to demand your money back. Additionally, merchants who choose to offer you a "money-back guarantee" must live up to their promise.
In general, there are three categories of special circumstances under which Michigan law gives you the right to a "cooling-off period," during which time you may cancel the contract. The three special categories are:
For more information on whether you can cancel a contract, please see the Attorney General’s Consumer Alert entitled “Contract Cancellation.”
Call the Attorney General’s Consumer Protection division toll-free at 877-765-8388. When you call, you will speak to one of our Complaint Specialists. If you give them the name of the business, and any other identifying information you have (such as an address or phone number), our Complaint Specialists can check our database to see if the Attorney General has received complaints about that business. They can tell you how many complaints were filed with the Attorney General, what some of the complaints are about, and whether the Consumer Protection division was able to successfully mediate these complaints.
You can also check online to see if the Better Business Bureau has any complaints on file regarding a company.
No, but because Michigan law defines a “new car” to include a car still “covered by a manufacturer’s express warranty at the time of purchase or lease,” it could apply to a used car that meets that criteria.
Otherwise, if you purchased your vehicle from a used car dealer, you can file a complaint with the Bureau of Information Security, Regulatory Monitoring Division at 888-767-6424.
There are three ways that you may obtain your free credit report.
Online: You can order your free credit report online. If you want to order your credit report online, make sure you go to AnnualCreditReport.com, and not to another Web site that looks similar. Identity thieves can set up look-alike websites and trick you into providing your personal financial information, including your Social Security number. To protect yourself, use the link provided on this website, or on the Federal Trade Commission website. If you order your credit report online, you will be asked to provide your Social Security number and you will be asked some questions to confirm your identity. You should receive your credit report almost instantaneously.
By Mail: You can also order your free credit report by mail. To do so, you can fill out an Annual Credit Report Request Form (PDF) and mail it to the address provided on the form. Consider shading the circle on the bottom right of the form so that the report mailed to you includes only the last four digits of your Social Security Number. Also, be careful when you are mailing your Credit Report Request Form and make sure you mail it using a secure U.S. Postal Service mailbox or take it to your local Post Office. DO NOT mail it using an unsecured mailbox in front of your house – anybody can pick it up and gain access to your Social Security number and date of birth.
By Phone: Finally, you can order your free credit report by phone, at 877-322-8228. This is an automated service, however, so you will not be able to speak to anyone.
For more information on your free credit reports, please see the Attorney General’s Consumer Alert, entitled “Free Credit Reports – What Consumers Should Know."
You can file a complaint online or call and speak with a Complaint Specialist at 877-765-8388.
Complaints against debt collectors may be filed with the Consumer Financial Protection Bureau, or the Federal Trade Commission.
If you have a complaint against a collection agency, please file a complaint online with the Attorney General's Consumer Protection division. You can also reach the Consumer Protection division by phone at 877-765-8388 or 517-335-7599.
To minimize telemarketing calls to your home, join the Federal Do Not Call Registry. If you have an active email account, you may register online. To register by phone, dial 888-382-1222 from the phone number you want to place on the Do Not Call Registry.
Registrations should stop most (but not all) telemarketing calls within 30 days of registration and need not be renewed.
You may contact the Attorney General’s Consumer Protection division by filing an online complaint or by calling 877-765-8388.
If your phone number has been registered on the Do Not Call Registry for 31 days or more, you are encouraged to file a complaint with the Federal Trade Commission. Report a Do Not Call Registry violation online or call 888-382-1222.
For more information on how to protect yourself from telemarketing fraud, please see the Attorney General's Consumer Alert entitled "Robocall and Telemarketing Fraud."
Visit the Michigan Drug Prices' website. This website is operated and updated by the Michigan Department of Health and Human Services.
