Sherman Antitrust Act

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John-Sherman-2

Sherman Antitrust Act is a landmark federal law in the United States that was passed in 1890. It is named after Senator John Sherman from Ohio, who was an expert on the regulation of commerce. The act was the first Federal act that outlawed monopolistic business practices. It is codified at 15 U.S.C. §§ 1–7 and is the foundation of American antitrust law. The Sherman Act aims to preserve free and unfettered competition as the rule of trade.

Background[edit | edit source]

Before the Sherman Antitrust Act, many businesses engaged in anticompetitive practices that hurt consumers, stifled competition, and allowed for the formation of monopolies and trusts. These monopolies controlled vast sectors of the economy, including oil, steel, and railroads, limiting competition and manipulating prices. In response to growing public outcry and the urging of President Benjamin Harrison, Congress passed the Sherman Antitrust Act.

Provisions[edit | edit source]

The Sherman Antitrust Act comprises two main sections:

Section 1[edit | edit source]

This section declares illegal every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations. This is meant to prohibit agreements among competitors that would limit competition or control prices.

Section 2[edit | edit source]

Section 2 addresses the issue of monopolization by making it a felony for any person to monopolize, or attempt to monopolize, or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations.

Enforcement and Interpretation[edit | edit source]

The enforcement of the Sherman Antitrust Act has evolved over time. Initially, the Supreme Court of the United States interpreted the act in a narrow manner, allowing many anticompetitive practices to continue. However, over time, the Court adopted a more expansive interpretation of the act, allowing for more vigorous enforcement of antitrust laws.

The Department of Justice (DOJ) and the Federal Trade Commission (FTC) are the primary federal agencies responsible for enforcing the Sherman Act. They can bring lawsuits in federal court against companies or individuals who violate the act. Additionally, private parties injured by antitrust violations can sue for triple damages under the act.

Impact[edit | edit source]

The Sherman Antitrust Act has had a profound impact on the American economy and business practices. It has been used to break up monopolies, such as the breakup of Standard Oil in 1911 and AT&T in 1982. The act has also been applied to modern technology companies and played a role in the regulation of the internet and e-commerce.

Criticism and Support[edit | edit source]

Criticism of the Sherman Antitrust Act has centered on its vague language, particularly what constitutes "unreasonable" restraint of trade. Supporters argue that the act is necessary to protect consumers and ensure a competitive marketplace. Critics, however, contend that it can be used to punish successful companies and stifle innovation.

Conclusion[edit | edit source]

The Sherman Antitrust Act remains a critical tool for regulating competition in the U.S. economy. Despite its age, it continues to adapt to the complexities of modern business practices, ensuring that the American market remains free and competitive.

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Contributors: Prab R. Tumpati, MD