Sherman Antitrust Act

Definition

The Sherman Antitrust Act is a landmark piece of United States antitrust legislation that was enacted in 1890. It prohibits activities that restrict interstate commerce and lead to monopolies, with the goal of promoting competition and protecting consumers from the harmful effects of monopolistic practices.

5 Must Know Facts For Your Next Test

1. The Sherman Antitrust Act was the first major federal law to limit monopolies and promote competition in the United States.
2. The Act prohibits any contract, combination, or conspiracy in restraint of interstate or foreign trade, as well as attempts to monopolize any part of trade or commerce.
3. The Act gives the federal government the power to investigate and prosecute companies and individuals engaged in anticompetitive practices.
4. The Sherman Antitrust Act has been used to break up large monopolistic corporations, such as Standard Oil and American Tobacco Company.
5. The Act has been amended and supplemented by other antitrust laws, including the Clayton Act and the Federal Trade Commission Act.

Review Questions

• Explain how the Sherman Antitrust Act relates to important business laws and regulations.
  • The Sherman Antitrust Act is a foundational piece of business legislation in the United States, as it establishes rules and regulations to promote fair competition and prevent monopolistic practices. It is considered one of the most important business laws, as it directly impacts the structure and conduct of businesses, particularly those engaged in interstate commerce. The Act's provisions against restraints of trade and attempts to monopolize have shaped the legal landscape for businesses, requiring them to operate within the bounds of antitrust laws to avoid potential prosecution and penalties.
• Describe the historical context and significance of the Sherman Antitrust Act in the development of antitrust law.
  • The Sherman Antitrust Act was enacted in 1890 in response to the growing power of large corporations and monopolies that were seen as detrimental to the public interest. It marked a significant milestone in the history of antitrust law, as it was the first major federal law to directly address the issue of monopolistic practices. The Act established the legal framework for challenging anticompetitive behavior and laid the groundwork for subsequent antitrust legislation, such as the Clayton Act and the Federal Trade Commission Act. The Sherman Antitrust Act has been a crucial tool in the government's efforts to maintain a competitive marketplace and protect consumers from the harmful effects of monopolistic power.
• Analyze the role of the Federal Trade Commission in enforcing the provisions of the Sherman Antitrust Act and promoting competition.
  • The Federal Trade Commission (FTC) plays a vital role in enforcing the Sherman Antitrust Act and ensuring compliance with antitrust laws. The FTC is empowered to investigate and prosecute companies and individuals engaged in anticompetitive practices, such as price-fixing, market allocation, and monopolistic behavior. The FTC's enforcement actions under the Sherman Antitrust Act have been instrumental in breaking up large monopolies, preventing mergers that would significantly reduce competition, and addressing other forms of anticompetitive conduct. By actively monitoring the marketplace and taking enforcement action when necessary, the FTC helps to uphold the principles of the Sherman Antitrust Act and promote a fair and competitive business environment for the benefit of consumers.

Related terms

Antitrust Law: Antitrust laws are a collection of federal and state laws that regulate the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers.

Monopoly: A monopoly is a market structure in which a single supplier or provider of a good or service has exclusive control over the available supply, allowing them to dictate prices and terms of sale.

Federal Trade Commission (FTC): The Federal Trade Commission is an independent agency of the United States government that enforces antitrust laws and promotes consumer protection.