Antitrust

Antitrust Acts

To address concerns of the growing number of monopolies, the federal government developed the Sherman Antitrust Act in 1890. This act became the primary legislation to address concerns of unfair competition and market conditions. The Sherman Act is compromised of two primary sections. Section 1 addresses any actions intended to produce an unreasonable restraint of trade or commerce. Specifically, this section prohibits contracts, combinations, and conspiracies that attempt to restrain trade efforts.

Section 2 of the Sherman Act deals with the issue of monopolies. It states that any person or persons who attempt or conspire to monopolize an industry is in violation of the act. Other provisions within the Sherman Act pertain to criminal sanctions. More specifically, the act allows the federal government to seek criminal and civil remedies against companies and subjects violators to potential fines or imprisonment. Private citizens injured by monopolistic practices can also seek damages.

Shortly after the development of the Sherman Act, Congress passed other legislation to deal with unfair market practices. It should be noted that about 10 of the first 15 antitrust cases were brought against labor unions and organizers, accusing them of using labor strikes and boycotts as restraints of trade.

In 1914, the Clayton Act and the Federal Trade Commission Act were passed. The Clayton Act focuses primarily on the development of mergers. This act suggests that mergers necessarily increase concentration and encourage coordinated activity among a few companies. The existence of such mergers means that a relatively small number of companies can control prices, market conditions, and effectively reduce competition.

In 1968, the Clayton Act served as the basis for the development of the Merger Guidelines drafted by the Department of Justice's Antitrust Division. The guidelines outline the conditions under which mergers would likely be challenged and considered a violation. The Federal Trade Commission Act was designed to punish any unfair methods of competition. In particular, this act made it unlawful to restrict competition using unfair trade practices.

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