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Sherman Antitrust Act
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In 1890, Congress responded by passing the Sherman Antitrust Act, which outlawed trusts and prohibited "illegal" monopolies, or monopolies that could be shown to be using their power to squelch competition. In the early 1900s, Congress used the act to break up two such monopolies — the Standard Oil Co. and the American Tobacco Co.
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The Sherman Antitrust Act (1890) is the principal antitrust law. It outlaws all contracts, combinations and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids and allocate customers.
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The oldest and most important federal antitrust law, the Sherman Antitrust Act has provided the primary statutory basis for American antitrust enforcement and case law since 1890. Like the other antitrust laws, the Sherman Act targets activities restricting marketplace competition. The act's sweeping prohibition of “[e]very contract, combination … or conspiracy†in restraint of interstate or foreign trade or commerce, set forth in its first section, addresses collusive or exclusionary group behavior. Section 2, prohibiting monopolization and attempted monopolization, primarily addresses singleâ€firm conduct, although it ... condemns conspiracies to monopolize. Violations of the act currently are punishable by fines of up to $350,000 for individuals and up to $10 million for corporations, as well as by imprisonment of up to three years. Both the United States and private parties can seek federal court injunctions against threatened breaches of the act and are entitled to collect three times the amount of any injury they have sustained because of its violation.
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Sherman Antitrust Act, basic federal enactment regulating the operations of corporate trusts, passed by the U.S. Congress in July 1890, through the efforts of Senator John Sherman of Ohio. The act declared 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. Criminal penalties were provided for violators of the law, and aggrieved persons were entitled to recover three times the amount of losses suffered as a result of the violation. The Sherman Act has been amended and supplemented by several subsequent enactments. Most notable among these enactments was the Clayton Antitrust Act of 1914.
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The Sherman Antitrust Act of 1890 was the first U.S. antitrust law and still serves as the foundation of subsequent U.S. antitrust law. Under this act, actions that restrained trade were declared to be illegal. The Sherman Act... was not initially used very often to break up monopolies for two primary reasons:
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The Sherman Antitrust Act was passed on July 2, 1890 as the principal law expressing national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers. The Act outlaws all contracts, combinations and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids and divide up customers. The Sherman Act ... makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm controls the market for a product or service by suppressing its competition rather than taking sales from less efficient competitors by means of legitimate competition and lower prices.
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Sherman Antitrust Act