1 minute read

Sherman Antitrust Act

Did You Know . . .

Section 1 outlaws "every contract, combination . . . or conspiracy, in restraint of trade—any scheme, or agreement to inhibit competition." By the early 1900s, however, the Supreme Court decided the intent of Congress was to outlaw only those agreements that restrained competition unreasonably. It would be left up to the courts to decide what agreements were unreasonable.
Even if competition is limited, reasonable business practices are not illegal under antitrust laws. For example, according to the FTC, if a group of manufacturers all decide to make certain products with specific fire resistant materials, the decision will have reasonable justification. Even though it limits what materials can be used, and limits consumer choice, courts would see it as a standard adopted to provide for consumer safety.
Section 2 makes it illegal for a company or companies to form or attempt to form a monopoly. Courts have interpreted this section to mean that only a monopoly reached by unreasonable practices is illegal. U.S. antitrust laws do not outlaw monopolies that companies establish by creating a superior product, vigorous competition including setting lower prices, efficient business practices, and excellent customer service. This is considered the American competitive spirit working in a proper manner. Only when a monopoly has been formed by suppressing competition through various anticompetitive schemes is the monopoly illegal.