Antitrust Law

Legislation enacted by the federal and various state governments to regulate trade and commerce by preventing unlawful restraints, price-fixing, and monopolies; to promote competition; and to encourage the production of quality goods and services at the lowest prices, with the primary goal of safeguarding public welfare by ensuring that consumer demands will be met by the manufacture and sale of goods at reasonable prices.

Antitrust law seeks to make enterprises compete fairly. It has had a serious effect on business practices and the organization of U.S. industry. Premised on the belief that free trade benefits the economy, businesses, and consumers alike, the law forbids several types of restraint of trade and monopolization. These fall into four main areas: agreements between or among competitors, contractual arrangements between sellers and buyers, the pursuit or maintenance of MONOPOLY power, and mergers.

A wood engraving from an 1884 Harper's Monthly shows Daniel Shays and his comrades occupying a Massachusetts courthouse to prevent the court from directing legal action at debt-ridden farmers in 1786.
BETTMANN/CORBIS

The Sherman Anti-Trust Act of 1890 (15U.S.C.A. § 1 et seq.) is the basis for U.S. antitrust law, and many states have modeled their own statutes upon it. As weaknesses in the Sherman Act became evident, Congress added amendments to it at various times through 1950. The most important are the CLAYTON ACT of 1914 (15 U.S.C.A. § 12 et seq.) and the ROBINSON-PATMAN ACT of 1936 (15 U.S.C.A. § 13 et seq.). Congress also created a regulatory agency to administrate and enforce the law, under the Federal Trade Commission Act of 1914 (15 U.S.C.A. §§ 41–58). In an ongoing analysis influenced by economic, intellectual, and political changes, the U.S. Supreme Court has played the leading role in shaping the ways in which these laws are applied.

Enforcement of antitrust law depends largely on two agencies: the FEDERAL TRADE COMMISSION (FTC), which may issue cease-and-desist orders to violators, and the Antitrust Division of the U.S. DEPARTMENT OF JUSTICE (DOJ), which can litigate. Private parties may also bring civil suits. Violations of the Sherman Act are felonies carrying fines of up to $10 million for corporations, and fines of up to $350,000 and prison sentences of up to three years for persons. The federal government, states, and individuals may collect treble (i.e., triple) the amount of damages that they have suffered as a result of injuries.