What is the significance of sherman antitrust act

This legislation was an anti-trust act, authorizing the federal government to break up any businesses that prohibited competition. The federal government utilized this legislation throughout the late s and the s to break up monopolies, including that of the Standard Oil Company in Numerous Americans feared the growing number of companies, like Standard Oil, that dominated the marketplace, preventing competitors from organizing.

These include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids. These acts are " per se " violations of the Sherman Act; in other words, no defense or justification is allowed.

The penalties for violating the Sherman Act can be severe. Although most enforcement actions are civil, the Sherman Act is also a criminal law, and individuals and businesses that violate it may be prosecuted by the Department of Justice.

Criminal prosecutions are typically limited to intentional and clear violations such as when competitors fix prices or rig bids. The Federal Trade Commission Act bans "unfair methods of competition" and "unfair or deceptive acts or practices. The FTC Act also reaches other practices that harm competition, but that may not fit neatly into categories of conduct formally prohibited by the Sherman Act.

But because the legislation's definition of concepts such as trusts, monopolies, and collusion was not clearly defined, few business entities were actually prosecuted under its measures. It also closed loopholes that the Sherman Act established, including those that dealt specifically with anti-competitive mergers, monopolies, and price discrimination.

For example, the Clayton Act prohibits appointing the same person to make business decisions for competing companies. The Sherman Antitrust Act was born against a backdrop of increasing monopolies and abuses of power by large corporations and railroad conglomerates. Congress passed the Interstate Commerce Act in in response to increasing public indignation about abuses of power and malpractices by railroad companies.

Its purpose was to regulate interstate transportation entities. The ICC had jurisdiction over U. During the first half of the 20th century, Congress consistently expanded the ICC's power so much that, despite its intended purpose, some believed that the ICC was often guilty of assisting the very companies it was tasked to regulate by favoring mergers that created unfair monopolies. The Gilded Age, which spanned from the s to about , was dominated by political scandal and robber barons , the growth of railroads, the expansion of oil and electricity, and the development of America's first giant national and international corporations.

The Gilded Age was an era of rapid economic growth. Corporations took off during this time, in part because they were easy to register and, unlike today, did not have to pay any incorporation fees. Lateth-century legislators' understanding of trusts is different from our current concept of the term. During that time, trusts became an umbrella term for any sort of collusive or conspiratorial behavior that was seen to render competition unfair.

The term trust has evolved over the years, though. Today, it refers to a financial relationship in which one party gives another the right to hold property or assets for a third party.

On Oct. Department of Justice filed an antitrust lawsuit against Google , alleging that the online giant engaged in anti-competitive conduct to preserve monopolies in search and search advertising. Deputy Attorney General Jeffrey Rosen compared the complaint to past uses of the Sherman Act to stop monopolistic practices by corporations.

The Sherman Antitrust Act is a law passed by Congress to promote competition within the economy by prohibiting companies from colluding or merging to form a monopoly.

The Sherman Antitrust Act was passed to address concerns by consumers who felt they were paying high prices on essential goods and by competing companies who believed they were being shut out of their industries by larger corporations.

Those found guilty of violating the Sherman Act can face a hefty punishment. It is also a criminal law, and offenders may serve prison sentences of up to 10 years. In some cases, heftier fines could also be issued, worth twice the amount the conspirators gained from the illegal acts or twice the money lost by the victims. Many household names have been hit with antitrust suits based in part on the Sherman Act.

Other than Google, in recent years Microsoft and Apple have both faced complaints, with the former accused of seeking to create a monopoly in Internet browser software and the latter of unethically raising the price of its e-books and, in later years, exploiting the market power of its app store.

The Clayton Act was introduced later, in , to address some of the specific practices that the Sherman Act did not clearly prohibit or failed to properly clarify. The Sherman Act, the first of its kind, was deemed too vague, allowing some companies to find ways to maneuver around it. Essentially, the Clayton Act deals with similar topics, such as anti-competitive mergers, monopolies, and price discrimination but adds more detail and scope to eliminate some of the previous loopholes.

Over the years, antitrust laws continue to be amended to reflect the current business environment and fresh observations. It made monopolization and other contracts that unreasonably restrain trade illegal. The Sherman Act was named for Sen. John Sherman of Ohio, who was considered an expert on regulating commerce. It was signed into law by President Benjamin Harrison on July 2, Some states had already passed similar laws, but their scope was limited to intrastate business, whereas the Sherman Antitrust Act was applied across the nation.

The second section makes it unlawful to monopolize a part of commerce. These include, "protests against low wages by people who are ineligible for union membership. It monitors businesses and challenges them when they're suspected of antitrust activities. The FTC reviews all major mergers and agreements, analyzing their potential effects on consumers and competition.

While great in theory, the Sherman Act proved too vague in practice. For instance, it didn't clearly define key terms such as "monopoly" and "trust," and left up for interpretation what constitutes "unreasonable" restraint of trade. This left loopholes through which corporations could argue their defense. The Clayton Act strengthens the Sherman Act by clarifying key points in and prohibiting other harmful practices that the Sherman Act does not address, such as mergers and interlocking directorates when one person makes business decisions for competing companies.

Hay says the most significant provision that supplements the Sherman Act deals with mergers, primarily between competitors. It allowed private parties to sue for triple damages if they have been harmed by conduct in violation of either the Clayton Act or the Sherman Act.

Later, amendments further strengthened the Clayton Act, such as the Robinson-Patman Act amendment of , making it illegal for merchants to use certain discriminatory pricing in their dealings with each other.