Sherman Antitrust Act (1890)

The Sherman Antitrust Act, written by Senator John Sherman of Ohio,  was a federal statute passed by Congress in 1890. This act was passed by Congress as a way of regulating interstate commerce and is one of the most important statutes in American competition law. Competition laws were created in the United States to help maintain fair competition amongst corporations and to stop them from conducting behavior that discourages competition.The Sherman Antitrust Act was passed in response to the widespread concern of the public to stop big corporations from dominating commerce in the United States. The act was passed to aid the greater good and success of the American people as a whole, versus the unyielding success of a few.

The main goal of the Sherman Antitrust Act was to promote fair industrial competition. This gave smaller businesses a chance to thrive. It was created to prohibit “every contract, combination…or conspiracy, in restraint of trade” or interstate commerce, and every attempt to monopolize any part of trade or commerce to be illegal (Oyez). According to Sherman, the original intent of the act wasn’t to put the companies who had great marketable gains from “superior skill and intelligence” in danger, but to stop monopolies and cartels, who didn’t give others in the market a chance to thrive from threatening economic competition.

The Sherman Antitrust Act is divided into three parts with specific provisions for regulating economic competition. In Section 1 of the Act, the authors set forth a basis for anticompetitive conduct when dealing with commerce. Section 1 of the act states, “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, is declared to be illegal.” This means that any attempt to monopolize a business across state lines or national borders will be deemed illegal and a violation of the act. In Section 2, the authors discuss the effects of anticompetitive behavior. It states, “Every person who shall monopolize, or attempt to monopolize, or combine 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, shall be deemed guilty of a felony…”  This section gives the consequences of violating the Sherman Antitrust Act. It seems to be used to deter corporations from engaging in anticompetitive practices.  Section 3, extends the provisions to corporations in the U.S territories.

Over the years, many changes have been made to the Antitrust Act and additional legislations have been added. In 1914, the Clayton Antitrust Act was passed to put additional and more specific regulations on anticompetitive activities.  Under the Clayton Antitrust Act, activities such as price discrimination between different purchasers are illegal if it leads to the creation of a monopoly.  The Clayton Act supplemented the Sherman Antitrust Act because it made more specific provisions outside of what was originally discussed in the Sherman Act.  The Sherman Antitrust Act is important because it gave Congress more authority over economic commerce.


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