Antitrust Law

Study Guide

Antitrust: an overview

Trusts and monopolies are concentrations of wealth in the hands of a few. Such conglomerations of economic resources are thought to be injurious to the public and individuals. This is because such trusts minimize, if not obliterate normal marketplace competition, and yield undesirable price controls. These, in turn, cause markets to stagnate and sap individual initiative.

To prevent trusts from creating restraints on trade or commerce, and reducing competition, Congress passed the Sherman Antitrust Act in 1890. The Sherman Act was designed to maintain economic liberty, and to eliminate restraints on trade and competition. The Sherman Act is the main source of Antitrust law.

The Sherman Act is a Federal statute, and as such, has a scope limited by Constitutional constraints on the Federal government, but the Commerce clause allows for a very wide interpretation and application of this act: The Act applies to all transactions and business involved in interstate commerce, or if the activities are local, affecting interstate commerce. The latter phrase has been interpretted to allow broad application of the Sherman Act.

Most if not all states have comparable statutes prohibiting monopolistic conduct, price fixing agreements, and other acts in restraint of trade having strictly local impact.

Basic Ideas

The Pillars of Antitrust Law

  • The Sherman Antitrust Act (1890) outlawed trusts and prohibited "illegal" monopolies. A trust was a relationship between businesses which teamed up through anti-competitiv e agreements to gain market dominance. In the early 1900's, Standard Oil Co. and the American Tobacco Co. were prosecuted under the Sherman Antitrust Act. 
  • The Clayton Antitrust Act (1914) issued further laws that outlawed: price fixing, abusing power to create or maintain a monopoly, and "interlinking" of companies that share d board of directors. 
  • The Federal Trade Commission Act (1914) created the Federal Trade Commission which duties were to prevent unfair methods of competition in business. 

Current Issues and New Obstacles

  • One of the primary concerns of our current market economy is whether the FTC and DOJ's antiquated and beurotic means of prosecuting companies under antitrust laws can withstand the fast paced computer market, and how the laws and their enforceme nts must be adapted to handle an industry that did not even exist when antitrust laws were first created. 
  • Does antitrust law comute? Can government regulate anticompetitive practices in a digital age? Online Exchange 
  • Does antitrust law have a place in the computer industry? Legal Bytes