Antitrust

Sherman Antitrust Act

Two key provisions of the Sherman Antitrust Act were meant to curb situations where the concentration of power interferes with trade or reduces competition. One provision applies to cartels, or attempts by companies to limit industrial output, reduce competition within their market sector, and/or manipulate market share. A second provision, which is enforced by the Department of Justice, makes attempts to monopolize any part of commerce or trade within the United States illegal. When a firm is found to be in violation of the act, the Department of Justice can serve it with an injunction to prohibit further illegal action or, in [Page 111]extreme cases, the courts can order that it be dissolved.

Typically, enforcement actions under the antitrust act are civil actions and violators may be punished by fines, but criminal penalties can be applied and may be severe. Criminal prosecutions are usually limited to intentional and clear violations of the law, such as price fixing or rigged bids. Criminal offenses may result in fines for corporations of up to $100 million and/or imprisonment of up to 10 years. Injured private parties may sue for triple the amount of damages incurred.

During the first two decades following passage of the act, most enforcement was against labor unions. This targeted action against unions created problems for workers who needed some way to balance the bargaining power of their employers. Some scholars speculate that this was because the language of the act was fairly vague and corporations used loopholes to their advantage. But by the turn of the century, the Progressive era movement led by President William McKinley and subsequently President Theodore Roosevelt breathed new life into the trust-busting action by the government. Congress first created the Federal Trade Commission (FTC) in September 1914 and 1 month later passed the Clayton Antitrust Act, with the purpose of adding clarity and substance to the Sherman Antitrust Act. This legislation amplified or changed the Sherman antitrust law by providing greater regulatory supervision of price discrimination, corporate supervision, and mergers. It allowed the Department of Justice and the newly created FTC the ability to regulate all mergers and gives government the discretion to approve them or not.

The FTC was set up with the power to enforce U.S. civil antitrust law and promotion of consumer protection, giving it the unique dual mission to promote both consumer protection and promote competition.

...