Antitrust Legislation in the United States
Emergence of Antitrust Legislation
Introduction to Antitrust Legislation
By the late 19th century, abuses of the trust technique to crush competition and create monopolies in numerous industries had become so great that the public demanded something be done about the trusts. As a result, the U.S. Congress in 1890 passed the Sherman Antitrust Act. This landmark legislation has two main provisions: First, every contract or combination, in the form of a trust or otherwise, or conspiracy in restraint of trade in interstate commerce is illegal; and second, it is illegal for any person to monopolize, attempt to monopolize, or combine or conspire with other persons to monopolize any part of interstate trade or commerce. Originally, persons convicted under the Sherman Act were only judged guilty of a misdemeanor, subject to a maximum fine of $50,000 and no more than a year in jail. Violation of the Sherman Act is now a felony, punishable by up to three years in prison; corporations found in violation may be fined up to $1 million. Individuals injured by violations of the act may bring suit for triple damages.
The Sherman Act was the first of a series of legislative enactments aimed at controlling attempts by business firms to collude and establish monopoly power in industry and commerce. Other acts followed when it became apparent that the nation’s antitrust laws had loopholes. In 1914, Congress passed the Clayton Antitrust Act, which was aimed at eliminating practices that either substantially lessened competition or tended to create a monopoly. Such practices included price discrimination to eliminate competition; the use of tying contracts (that is, contracts in which, as a condition of the sale, a buyer agreed not to purchase a competitor’s product); combinations in restraint of trade brought about by acquiring the stock of competing firms; and the use of interlocking directorates, in which the same individuals sit on the board of directors of several companies and cooperate to establish monopoly control. Also in 1914 Congress set up the Federal Trade Commission as a “watchdog” agency to discourage “unfair methods of competition” by issuing “cease and desist” orders.
The next major piece of antitrust legislation, the Robinson-Patman Act (1936), helped to define explicitly the forms of price discrimination that the Clayton Act forbid. It was aimed more at preventing small producers from being driven out of business by larger competitors than at protecting consumers. The last important antitrust legislation passed was the Celler-Kefauver Antimerger Act (1950). Its purpose was to prevent a firm from carrying out a merger with another firm if the effect was to substantially lessen competition or to create a monopoly.” (1)
Resources
Notes and References
- Information about Antitrust Legislation in the Encarta Online Encyclopedia
Guide to Antitrust Legislation
Other legislation
Find more information on Other legislation in relation to the Antitrust Implications of Doing Business Overseas in the legal Encyclopedias.
Antitrust Legislation and the International Trade Law
Resources
See Also
Further Reading
- Antitrust Legislation entry in the Dictionary of International Trade Law (Raj Bhala)
- Antitrust Legislation entry in the Gale Encyclopedia of U.S. Economic History (Thomas Carson; Mary Bonk)
- Antitrust Legislation entry in the Dictionary of International Trade
- Antitrust Legislation entry in the Dictionary of International Trade: Handbook of the Global Trade Community (Edward G. Hinkelman)
Webb-Pomerene Act
Find more information on Webb-Pomerene Act in relation to the Antitrust Implications of Doing Business Overseas in the legal Encyclopedias.