Unit 2 Sherman Antitrust Act of 1890

4/8/2020 Sherman Antitrust Act of 1890 - Wikipedia
Sherman Antitrust Act of 1890

The Sherman Antitrust Act of 1890[1] (26 Stat. 209 (http://legis
link.org/us/stat-26-209), 15 U.S.C. §§ 1 (https://www.law.cornell.ed Sherman Antitrust Act
u/uscode/text/15/1)–7 (https://www.law.cornell.edu/uscode/text/1
5/7)) is a United States antitrust law that regulates competition
among enterprises, which was passed by Congress under the
presidency of Benjamin Harrison. It is named for Sen. John
Sherman, its principal author.
The Sherman Act broadly prohibits (1) anticompetitive agreements

and (2) unilateral conduct that monopolizes or attempts to
monopolize the relevant market. The Act authorizes the Department Long title An act to protect
of Justice to bring suits to enjoin (i.e. prohibit) conduct violating the trade and commerce
Act, and additionally authorizes private parties injured by conduct against unlawful
restraints and
violating the Act to bring suits for treble damages (i.e. three times as
monopolies
much money in damages as the violation cost them). Over time, the
federal courts have developed a body of law under the Sherman Act Enacted by the 51st United
making certain types of anticompetitive conduct per se illegal, and States Congress
subjecting other types of conduct to case-by-case analysis regarding Citations
whether the conduct unreasonably restrains trade. Statutes at 26 Stat. 209 (http://le
Large gislink.org/us/stat-26-
The law attempts to prevent the artificial raising of prices by 209)
restriction of trade or supply.[2] "Innocent monopoly", or monopoly
Legislative history
achieved solely by merit, is perfectly legal, but acts by a monopolist
to artificially preserve that status, or nefarious dealings to create a
Introduced in the Senate by
monopoly, are not. The purpose of the Sherman Act is not to protect
John Sherman
competitors from harm from legitimately successful businesses, nor
Passed the Senate on (51–1)
to prevent businesses from gaining honest profits from consumers,
but rather to preserve a competitive marketplace to protect Signed into law by President
consumers from abuses.[3] Benjamin Harrison on July 2,
1890
United States Supreme Court
cases
Contents
Background United States v. E.C. Knight Co.,
156 U.S. 1 (https://supreme.justi
Provisions a.com/cases/federal/us/156/1/)
Original text (1894)
Subsequent legislation expanding its scope United States v. Trans-Missouri
Freight Ass'n, 166 U.S. 290 (http
Legacy
s://supreme.justia.com/cases/fed
Legal application eral/us/166/290/) (1897)
Constitutional basis for legislation Northern Securities Co. v. United
Elements States, 193 U.S. 197 (https://sup
Violations "per se" and violations of the "rule of reason" reme.justia.com/cases/federal/u
s/193/197/) (1904)
Modern trends
Inference of conspiracy
https://en.wikipedia.org/wiki/Sherman_Antitrust_Act_of_1890 1/15
Manipulation of market Hale v. Henkel, 201 U.S. 43 (http

s://supreme.justia.com/cases/fed
Monopoly
eral/us/201/43/) (1906)
Application of the act outside pure commerce
Standard Oil Co. of New Jersey
Preemption by Section 1 of state statutes that restrain v. United States, 221 U.S. 1 (http
competition s://supreme.justia.com/cases/fed
eral/us/221/1/) (1911)
Criticism
United States v. American
See also Tobacco Co., 221 U.S. 106 (http
References s://supreme.justia.com/cases/fed
eral/us/221/106/) (1911)
External links
Federal Baseball Club v.
National League, 259 U.S. 200
(https://supreme.justia.com/case
Background s/federal/us/259/200/) (1922)
United States v. National City
In Spectrum Sports, Inc. v. McQuillan 506 U.S. 447 (1993) the Lines, 334 U.S. 573 (https://supr
Supreme Court said: eme.justia.com/cases/federal/us/
334/573/) (1948)
“ The purpose of the [Sherman] Act is not to protect

businesses from the working of the market; it is to
protect the public from the failure of the market. The
Kiefer-Stewart Co. v. Seagram &
Sons, Inc., 340 U.S. 211 (https://
supreme.justia.com/cases/feder
law directs itself not against conduct which is al/us/340/211/) (1951)
competitive, even severely so, but against conduct
which unfairly tends to destroy competition itself.[4] ” Lorain Journal Co. v. United
States, 342 U.S. 143 (https://sup
reme.justia.com/cases/federal/u
According to its authors, it was not intended to impact market gains s/342/143/) (1951)
obtained by honest means, by benefiting the consumers more than
Continental Television, Inc. v.
the competitors. Senator George Hoar of Massachusetts, another GTE Sylvania, Inc., 433 U.S. 36
author of the Sherman Act, said the following: (https://supreme.justia.com/case
s/federal/us/433/36/) (1977)
“ ... [a person] who merely by superior skill and

intelligence...got the whole business because nobody
could do it as well as he could was not a monopolist..
Arizona v. Maricopa County
Medical Society, 457 U.S. 332 (h
ttps://supreme.justia.com/cases/f
(but was if) it involved something like the use of
ederal/us/457/332/) (1982)
means which made it impossible for other persons to
engage in fair competition."[5] ” Jefferson Parish Hosp. Dist. No.
2 v. Hyde, 466 U.S. 2 (https://su
preme.justia.com/cases/federal/
At Apex Hosiery Co. v. Leader 310 U. S. 469 (http://supreme.justia. us/466/2/) (1984)
com/us/310/469/case.html), 310 U. S. 492 (http://supreme.justia.c
Copperweld Corp. v.
om/us/310/469/case.html#492)-93 and n. 15:
Independence Tube Corp., 467
U.S. 752 (https://supreme.justia.
“ The legislative history of the Sherman Act, as well as
the decisions of this Court interpreting it, show that it
was not aimed at policing interstate transportation or
” com/cases/federal/us/467/752/)
(1984)
movement of goods and property. The legislative Leegin Creative Leather Prod.,
history and the voluminous literature which was Inc. v. PSKS, Inc., 551 U.S. 877
generated in the course of the enactment and during (https://supreme.justia.com/case
fifty years of litigation of the Sherman Act give no hint s/federal/us/551/877/) (2007)
that such was its purpose.[6] They do not suggest that,
in general, state laws or law enforcement machinery
were inadequate to prevent local obstructions or
interferences with interstate transportation, or

presented any problem requiring the interposition of
federal authority.[7] In 1890, when the Sherman Act
was adopted, there were only a few federal statutes
imposing penalties for obstructing or misusing
interstate transportation.[8] With an expanding
commerce, many others have since been enacted
safeguarding transportation in interstate commerce as
the need was seen, including statutes declaring
conspiracies to interfere or actual interference with
interstate commerce by violence or threats of violence
to be felonies.[9] The law was enacted in the era of
"trusts" and of "combinations" of businesses and of
capital organized and directed to control of the market
by suppression of competition in the marketing of Sen. John Sherman (R–Ohio),
goods and services, the monopolistic tendency of the principal author of the
which had become a matter of public concern. The Sherman Antitrust Act
goal was to prevent restraints of free competition in
business and commercial transactions which tended
to restrict production, raise prices, or otherwise control
the market to the detriment of purchasers or
consumers of goods and services, all of which had
come to be regarded as a special form of public
injury.[10] For that reason the phrase "restraint of
trade," which, as will presently appear, had a well
understood meaning in common law, was made the
means of defining the activities prohibited. The
addition of the words "or commerce among the
several States" was not an additional kind of restraint
to be prohibited by the Sherman Act, but was the
means used to relate the prohibited restraint of trade
to interstate commerce for constitutional purposes,
Atlantic Cleaners & Dyers v. United States, 286 U. S.
427, 286 U. S. 434, so that Congress, through its
commerce power, might suppress and penalize
restraints on the competitive system which involved or
affected interstate commerce. Because many forms of
restraint upon commercial competition extended
across state lines so as to make regulation by state
action difficult or impossible, Congress enacted the
Sherman Act, 21 Cong.Rec. 2456. It was in this sense
of preventing restraints on commercial competition
that Congress exercised "all the power it possessed."
Atlantic Cleaners & Dyers v. United States, supra, 286
U. S. 435.
At Addyston Pipe and Steel Company v. United States, 85 F.2d 1, affirmed, 175 U. S. 175 (http://suprem
e.justia.com/us/175/211/case.html) U.S. 211;
At Standard Oil Co. of New Jersey v. United States, 221 U. S. 1 (http://supreme.justia.com/us/221/1/ca

se.html), 221 U. S. 54 (http://supreme.justia.com/us/221/1/case.html#54)-58.
Provisions
Original text
The Sherman Act is divided into three sections. Section 1 delineates and prohibits specific means of
anticompetitive conduct, while Section 2 deals with end results that are anti-competitive in nature. Thus,
these sections supplement each other in an effort to prevent businesses from violating the spirit of the
Act, while technically remaining within the letter of the law. Section 3 simply extends the provisions of
Section 1 to U.S. territories and the District of Columbia.
Section 1:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint

of trade or commerce among the several States, or with foreign nations, is declared to
be illegal.[11]
Section 2:
Every person who shall monopolize, or attempt to monopolize, or combine or conspire

with any other person or persons, to monopolize any part of the trade or commerce
among the several States, or with foreign nations, shall be deemed guilty of a felony [. .
. ][12]
Subsequent legislation expanding its scope
The Clayton Antitrust Act, passed in 1914, proscribes certain additional activities that had been
discovered to fall outside the scope of the Sherman Antitrust Act. For example, the Clayton Act added
certain practices to the list of impermissible activities:
price discrimination between different purchasers, if such discrimination tends to create a monopoly
exclusive dealing agreements
tying arrangements
mergers and acquisitions that substantially reduce market competition.
The Robinson–Patman Act of 1936 amended the Clayton Act. The amendment proscribed certain anti-
competitive practices in which manufacturers engaged in price discrimination against equally-situated
distributors.
Legacy
The federal government began filing cases under the Sherman Antitrust Act in 1890. Some cases were
successful and others were not; many took several years to decide, including appeals.
Notable cases filed under the act include:[13]
United States v. Workingmen's Amalgamated Council of New Orleans (1893), which was the first to
hold that the law applied to labor unions (reversed by the Clayton Antitrust Act).
Chesapeake & Ohio Fuel Co. v. United States (1902), in which the trust was dissolved[14]
Northern Securities Co. v. United States (1904), which reached the Supreme Court, dissolved the
company and set many precedents for interpretation.
Hale v. Henkel (1906) also reached the Supreme Court. Precedent was set for the production of
documents by an officer of a company, and the self-incrimination of the officer in his or her testimony
to the grand jury. Hale was an officer of the American Tobacco Co.
Standard Oil Co. of New Jersey v. United States (1911), which broke up the company based on
geography, and contributed to the Panic of 1910–11.
United States v. American Tobacco Co. (1911), which split the company into four.
United States v. General Electric Co (1911), where GE was judged to have violated the Sherman
Anti-Trust Act, along with International General Electric, Philips, Sylvania, Tungsol, and Consolidated
and Chicago Miniature. Corning and Westinghouse made consent decrees.[15]
Federal Baseball Club v. National League (1922) in which the Supreme Court ruled that Major
League Baseball was not interstate commerce and was not subject to the antitrust law.
United States v. National City Lines (1953), related to the General Motors streetcar conspiracy.
United States v. AT&T Co., which was settled in 1982 and resulted in the breakup of the company.
United States v. Microsoft Corp. was settled in 2001 without the breakup of the company.
Legal application
Constitutional basis for legislation
Congress claimed power to pass the Sherman Act through its constitutional authority to regulate
interstate commerce. Therefore, federal courts only have jurisdiction to apply the Act to conduct that
restrains or substantially affects either interstate commerce or trade within the District of Columbia.
This requires that the plaintiff must show that the conduct occurred during the flow of interstate
commerce or had an appreciable effect on some activity that occurs during interstate commerce.
Elements
A Section 1 violation has three elements:[16]
(1) an agreement;
(2) which unreasonably restrains competition; and
(3) which affects interstate commerce.
A Section 2 monopolization violation has two elements:[17]
(1) the possession of monopoly power in the relevant market; and

(2) the willful acquisition or maintenance of that power as distinguished from growth or
development as a consequence of a superior product, business acumen, or historic accident.
Section 2 also bans attempted monopolization, which has the following elements:
(1) qualifying exclusionary or anticompetitive acts designed to establish a monopoly

(2) specific intent to monopolize; and
(3) dangerous probability of success (actual monopolization).
Violations "per se" and violations of the "rule of reason"
Violations of the Sherman Act fall (loosely[18]) into two categories:
Violations "per se": these are violations that meet the strict characterization of Section 1
("agreements, conspiracies or trusts in restraint of trade"). A per se violation requires no further
inquiry into the practice's actual effect on the market or the intentions of those individuals who
engaged in the practice. Conduct characterized as per se unlawful is that which has been found to
have a "'pernicious effect on competition' or 'lack[s] . . . any redeeming virtue'"[19] Such conduct
"would always or almost always tend to restrict competition and decrease output."[20] When a per se
rule is applied, a civil violation of the antitrust laws is found merely by proving that the conduct
occurred and that it fell within a per se category.[21] (This must be contrasted with rule of reason
analysis.) Conduct considered per se unlawful includes horizontal price-fixing,[22] horizontal market
division,[23] and concerted refusals to deal.[24]
Violations of the "rule of reason": A totality of the circumstances test, asking whether the
challenged practice promotes or suppresses market competition. Unlike with per se violations, intent
and motive are relevant when predicting future consequences. The rule of reason is said to be the
"traditional framework of analysis" to determine whether Section 1 is violated.[25] The court analyzes
"facts peculiar to the business, the history of the restraining, and the reasons why it was
imposed,"[26] to determine the effect on competition in the relevant product market.[27] A restraint
violates Section 1 if it unreasonably restrains trade.[28]
Quick-look: A "quick look" analysis under the rule of reason may be used when "an
observer with even a rudimentary understanding of economics could conclude that the
arrangements in question would have an anticompetitive effect on customers and markets,"
yet the violation is also not one considered illegal per se.[29] Taking a "quick look," economic
harm is presumed from the questionable nature of the conduct, and the burden is shifted to
the defendant to prove harmlessness or justification. The quick-look became a popular way
of disposing of cases where the conduct was in a grey area between illegality "per se" and
demonstrable harmfulness under the "rule of reason".
Modern trends
Inference of conspiracy
A modern trend has increased difficulty for antitrust plaintiffs as courts have come to hold plaintiffs to
increasing burdens of pleading. Under older Section 1 precedent, it was not settled how much evidence
was required to show a conspiracy. For example, a conspiracy could be inferred based on parallel
conduct, etc. That is, plaintiffs were only required to show that a conspiracy was conceivable. Since the
1970s, however, courts have held plaintiffs to higher standards, giving antitrust defendants an
opportunity to resolve cases in their favor before significant discovery under FRCP 12(b)(6). That is, to
overcome a motion to dismiss, plaintiffs, under Bell Atlantic Corp. v. Twombly, must plead facts
consistent with FRCP 8(a) sufficient to show that a conspiracy is plausible (and not merely conceivable
or possible). This protects defendants from bearing the costs of antitrust "fishing expeditions"; however
it deprives plaintiffs of perhaps their only tool to acquire evidence (discovery).
Manipulation of market
Second, courts have employed more sophisticated and principled definitions of markets. Market
definition is necessary, in rule of reason cases, for the plaintiff to prove a conspiracy is harmful. It is also
necessary for the plaintiff to establish the market relationship between conspirators to prove their
conduct is within the per se rule.
In early cases, it was easier for plaintiffs to show market relationship, or dominance, by tailoring market
definition, even if it ignored fundamental principles of economics. In U.S. v. Grinnell, 384 U.S. 563
(1966), the trial judge, Charles Wyzanski, composed the market only of alarm companies with services in
every state, tailoring out any local competitors; the defendant stood alone in this market, but had the
court added up the entire national market, it would have had a much smaller share of the national
market for alarm services that the court purportedly used. The appellate courts affirmed this finding;
however, today, an appellate court would likely find this definition to be flawed. Modern courts use a
more sophisticated market definition that does not permit as manipulative a definition.
Monopoly
Section 2 of the Act forbade monopoly. In Section 2 cases, the court has, again on its own initiative,
drawn a distinction between coercive and innocent monopoly. The act is not meant to punish businesses
that come to dominate their market passively or on their own merit, only those that intentionally
dominate the market through misconduct, which generally consists of conspiratorial conduct of the kind
forbidden by Section 1 of the Sherman Act, or Section 3 of the Clayton Act.
Application of the act outside pure commerce
The Act was aimed at regulating businesses. However, its application was not limited to the commercial
side of business. Its prohibition of the cartel was also interpreted to make illegal many labor union
activities. This is because unions were characterized as cartels as well (cartels of laborers).[30] This
persisted until 1914, when the Clayton Act created exceptions for certain union activities.
Preemption by Section 1 of state statutes that restrain

competition
To determine whether a particular state statute that restrains competition was intended to be preempted
by the Act, courts will engage in a two-step analysis, as set forth by the Supreme Court in Rice v. Norman
Williams Co.:
First, they will inquire whether the state legislation "mandates or authorizes conduct that necessarily
constitutes a violation of the antitrust laws in all cases, or ... places irresistible pressure on a private
party to violate the antitrust laws in order to comply with the statute." Rice v. Norman Williams Co.,
458 U.S. 654, 661; see also 324 Liquor Corp. v. Duffy, 479 U.S. 335 (1987) ("Our decisions reflect
the principle that the federal antitrust laws pre-empt state laws authorizing or compelling private
parties to engage in anticompetitive behavior.")
Second, they will consider whether the state statute is saved from preemption by the state action
immunity doctrine (aka Parker immunity). In California Retail Liquor Dealers Association v. Midcal
Aluminum, Inc., 445 U.S. 97, 105 (1980), the Supreme Court established a two-part test for applying
the doctrine: "First, the challenged restraint must be one clearly articulated and affirmatively
expressed as state policy; second, the policy must be actively supervised by the State itself." Id.
(citation and quotation marks omitted).
Criticism
Alan Greenspan, in his essay entitled Antitrust[31] described the Sherman Act as stifling innovation and
harming society. "No one will ever know what new products, processes, machines, and cost-saving
mergers failed to come into existence, killed by the Sherman Act before they were born. No one can ever
compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has
kept our standard of living lower than would otherwise have been possible." Greenspan summarized the
nature of antitrust law as: "a jumble of economic irrationality and ignorance."[32]
Greenspan at that time was a disciple and friend of Ayn Rand, and he first published Antitrust in Rand's
monthly publication The Objectivist Newsletter. Rand, who described herself as "a radical for
capitalism,"[33] opposed antitrust law not only on economic grounds but also morally, as a violation of
property rights, asserting that the "meaning and purpose" of antitrust law is "the penalizing of ability for
being ability, the penalizing of success for being success, and the sacrifice of productive genius to the
demands of envious mediocrity."[34]
In 1890, Representative William Mason said "trusts have made products cheaper, have reduced prices;
but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to
people of this country by the trusts which have destroyed legitimate competition and driven honest men
from legitimate business enterprise."[35] Consequently, if the primary goal of the act is to protect
consumers, and consumers are protected by lower prices, the act may be harmful if it reduces economy
of scale, a price-lowering mechanism, by breaking up big businesses. Mason put small business survival,
a justice interest, on a level concomitant with the pure economic rationale of consumer
Economist Thomas DiLorenzo notes that Senator Sherman sponsored the 1890 William McKinley tariff
just three months after the Sherman Act, and agrees with The New York Times which wrote on October
1, 1890: "That so-called Anti-Trust law was passed to deceive the people and to clear the way for the
enactment of this Pro-Trust law relating to the tariff." The Times went on to assert that Sherman merely
supported this "humbug" of a law "in order that party organs might say...'Behold! We have attacked the
trusts. The Republican Party is the enemy of all such rings.'" [36]
Dilorenzo writes: "Protectionists did not want prices paid by consumers to fall. But they also understood
that to gain political support for high tariffs they would have to assure the public that industries would
not combine to increase prices to politically prohibitive levels. Support for both an antitrust law and
tariff hikes would maintain high prices while avoiding the more obvious bilking of consumers."[37]
Robert Bork was well known for his outspoken criticism of the antitrust regime. Another conservative
legal scholar and judge, Richard Posner of the Seventh Circuit, does not condemn the entire regime, but
expresses concern with the potential that it could be applied to create inefficiency, rather than to avoid
inefficiency.[38] Posner further believes, along with a number of others, including Bork, that genuinely
inefficient cartels and coercive monopolies, the target of the act, would be self-corrected by market
forces, making the strict penalties of antitrust legislation unnecessary.[38]
Conversely, liberal Supreme Court Justice William O. Douglas criticized the judiciary for interpreting
and enforcing the antitrust law unequally: "From the beginning it [the Sherman Act] has been applied by
judges hostile to its purposes, friendly to the empire builders who wanted it emasculated... trusts that
were dissolved reintegrated in new forms... It is ironic that the Sherman Act was truly effective in only
one respect, and that was when it was applied to labor unions. Then the courts read it with a literalness
that never appeared in their other decisions."[39]
According to a 2018 study in the journal Public Choice, "Senator John Sherman of Ohio was motivated to
introduce an antitrust bill in late 1889 partly as a way of enacting revenge on his political rival, General
and former Governor Russell Alger of Michigan, because Sherman believed that Alger personally had
cost him the presidential nomination at the 1888 Republican national convention... Sherman was able to
pursue his revenge motive by combining it with the broader Republican goals of preserving high tariffs
and attacking the trusts."[40]
See also
Alcoa Lysine price-fixing conspiracy
American Bar Association Monsanto Co. v. Spray-Rite Service Corp.
American Tobacco Company National Linseed Oil Trust
Antitrust Northern Securities Company
Bell System divestiture Price fixing
Cartel Resale price maintenance
Clayton Antitrust Act of 1914 Sarbanes–Oxley Act
DRAM price fixing Standard Oil
George H. Earle, Jr. Standard Oil Co. of New Jersey v. United
Plan of Bill Proposed by Hon. George H. States
Earle, Jr., Philadelphia. (1911) at Ticketmaster
Wikisource Tying (commerce)
Federal Baseball Club v. National League United States v. Microsoft
Laissez-faire
References
1. Officially re-designated as the "Sherman Act" by Congress in the Hart–Scott–Rodino Antitrust
Improvements Act of 1976, (Public Law 94-435, Title 3, Sec. 305(a), 90 Stat. 1383 at p. 1397).
2. "Sherman AntiTrust Act, and Analysis" (http://butnowyouknow.net/those-who-fail-to-learn-from-histor
y/sherman-anti-trust-act-and-analysis/). 12 March 2011. Archived (http://archive.wikiwix.com/cache/2
0111118040849/http://butnowyouknow.net/those-who-fail-to-learn-from-history/sherman-anti-trust-act
-and-analysis/) from the original on 18 November 2011.
3. "This focus of U.S. competition law, on protection of competition rather than competitors, is not
necessarily the only possible focus or purpose of competition law. For example, it has also been said
that competition law in the European Union (EU) tends to protect the competitors in the marketplace,
even at the expense of market efficiencies and consumers."< Cseres, Katalin Judit (2005).
Competition law and consumer protection (https://books.google.com/?id=y3IOROCcVacC&printsec=f
rontcover). Kluwer Law International. pp. 291–293. ISBN 9789041123800. Archived (https://web.arch
ive.org/web/20130512183804/http://books.google.com/books?id=y3IOROCcVacC&printsec=frontcov
er&cad=0) from the original on May 12, 2013. Retrieved July 15, 2009.
4. Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458 (https://supreme.justia.com/cases/federal/us/5
06/447/#458) (1993).
5. Congress, United States; Finch, James Arthur (26 March 2018). "Bills and Debates in Congress
Relating to Trusts: Fiftieth Congress to Fifty-seventh Congress, First Session, Inclusive" (https://book
s.google.com/?id=OsssAAAAYAAJ&pg=PA279&lpg=PA279#v=onepage&f=false). U.S. Government
Printing Office. Archived (https://web.archive.org/web/20170409142100/https://books.google.com/bo
oks?id=OsssAAAAYAAJ&pg=PA279&lpg=PA279&source=bl&ots=QI5PFBZPn_&sig=0mccC_vXBFD
Uc9O8BsmPW2x6HAk&hl=en&ei=VoXFTs28OoObtwej1PWTCg&sa=X&oi=book_result&ct=result&r
esnum=3&ved=0CCgQ6AEwAg#v=onepage&f=false) from the original on 9 April 2017 – via Google
Books.
6. Footnote 11 appears here: "See the Bibliography on Trusts (1913) prepared by the Library of
Congress. Cf. Homan, Industrial Combination as Surveyed in Recent Literature, 44 Quart.J.Econ.,
345 (1930). With few exceptions, the articles, scientific and popular, reflected the popular idea that
the Act was aimed at the prevention of monopolistic practices and restraints upon trade injurious to
purchasers and consumers of goods and services by preservation of business competition. See,
e.g., Seager and Gulick, Trust and Corporation Problems (1929), 367 et seq., 42 Ann.Am.Acad.,
Industrial Competition and Combination (July 1912); P. L. Anderson, Combination v. Competition, 4
Edit.Rev. 500 (1911); Gilbert Holland Montague, Trust Regulation Today, 105 Atl.Monthly, 1 (1910);
Federal Regulation of Industry, 32 Ann.Am.Acad. of Pol.Sci., No. 108 (1908), passim; Clark, Federal
Trust Policy (1931), Ch. II, V; Homan, Trusts, 15 Ency.Soc.Sciences 111, 113: "clearly the law was
inspired by the predatory competitive tactics of the great trusts, and its primary purpose was the
maintenance of the competitive system in industry." See also Shulman, Labor and the Anti-Trust
Laws, 34 Ill.L.Rev. 769; Boudin, the Sherman Law and Labor Disputes, 39 Col.L.Rev. 1283; 40
Col.L.Rev. 14."
7. Footnote 12 appears here: "There was no lack of existing law to protect against evils ascribed to
organized labor. Legislative and judicial action of both a criminal and civil nature already restrained
concerted action by labor. See, e.g., the kinds of strikes which were declared illegal in Pennsylvania,
including a strike accompanied by force or threat of harm to persons or property, Brightly's Purdon's
Digest of 1885, pp. 426, 1172. For collection of state statutes on labor activities, see Report of the
Commissioner of Labor, Labor Laws of the Various States (1892); Bull. 370, Labor Laws of the
United States with Decisions Relating Thereto, United States Bureau of Labor Statistics (1925);
Witte, The Government in Labor Disputes (1932), 12–45, 61–81."
8. Footnote 13 appears here: "Three statutes covered in 1890 the Congressional action in relation to
obstructions to interstate commerce. A penalty was imposed for the refusal to transmit a telegraph
message (R.S. § 5269, 17 Stat. 366 (1872)) for transporting nitroglycerine and other explosives
without proper safeguards (R.S. § 5353, 14 Stat. 81 (1866)) and for combining to prevent the
continuous carriage of freight, 24 Stat. 382, 49 U.S.C. § 7."
9. Footnote 14 appears here: "See, e.g. regulation of; interstate carriage of lottery tickets, 28 Stat. 963
(1895), 18 U.S.C. § 387; Transportation of obscene books, 29 Stat. 512 (1897), 18 U.S.C. § 396;
transportation of illegally killed game, 31 Stat. 188 (1900), 18 U.S.C. §§ 392–395; interstate
shipment of intoxicating liquors, 35 Stat. 1136 (1909), 18 U.S.C. §§ 388–390; white slave traffic, 36
Stat. 825 (1910), 18 U.S.C. §§ 397–404; transportation of prize-fight films, 37 Stat. 240 (1912), 18
U.S.C. §§ 405–407; larceny of goods moving in interstate commerce, 37 Stat. 670 (1913), 18 U.S.C.
§ 409; violent interference with foreign commerce, 40 Stat. 221 (1917), 18 U.S.C. § 381;
transportation of stolen motor vehicles, 41 Stat. 324 (1919), 18 U.S.C. § 408; transportation of
kidnapped persons, 47 Stat. 326 (1932), 18 U.S.C. § 408a–408c; threatening communication in
interstate commerce, 48 Stat. 781 (1934), 18 U.S.C. § 408d; transportation of stolen or feloniously
taken goods, securities or money, 48 Stat. 794 (1934), 18 U.S.C. § 415; transporting strikebreakers,
49 Stat. 1899 (1936), 18 U.S.C. § 407a; destruction or dumping of farm products received in
interstate commerce, 44 Stat. 1355 (1927), 7 U.S.C. § 491. Cf. National Labor Relations Act, 49 Stat.
449 (1935), 29 U.S.C., Ch. 7, § 151, "Findings and declaration of policy. The denial by employers of
the right of employees to organize and the refusal by employers to accept the procedure of collective
bargaining lead to strikes and other forms of industrial strife or unrest, which have the intent or the
necessary effect of burdening or obstructing commerce. . . ." The Anti-Racketeering Act, 48 Stat.
979, 18 U.S.C. §§ 420a-420e (1934), is designed to protect trade and commerce against
interference by violence and threats. § 420a provides that "any person who, in connection with or in
relation to any act in any way or in any degree affecting trade or commerce or any article or
commodity moving or about to move in trade or commerce --" "(a) Obtains or attempts to obtain, by
the use of or attempt to use or threat to use force, violence, or coercion, the payment of money or
other valuable considerations . . . not including, however, the payment of wages by a bonafide
employer to a bona fide employee; or" "(b) Obtains the property of another, with his consent, induced
by wrongful use of force or fear, or under color of official right; or" "(c) Commits or threatens to
commit an act of physical violence or physical injury to a person or property in furtherance of a plan
or purpose to violate subsections (a) or (b); or" "(d) Conspires or acts concertedly with any other
person or persons to commit any of the foregoing acts; shall, upon conviction thereof, be guilty of a
felony and shall be punished by imprisonment from one to ten years or by a fine of $10,000 or both."
But the application of the provisions of § 420a to labor unions is restricted by § 420d, which provides:
"Jurisdiction of offenses. Any person charged with violating section 420a of this title may be
prosecuted in any district in which any part of the offense has been committed by him or by his
actual associates participating with him in the offense or by his fellow conspirators: Provided, That no
court of the United States shall construe or apply any of the provisions of sections 420a to 420e of
this title in such manner as to impair, diminish, or in any manner affect the rights of bona fide labor
organizations in lawfully carrying out the legitimate objects thereof, as such rights are expressed in
existing statutes of the United States." It is significant that Chapter 9 of the Criminal Code, dealing
with "Offenses Against Foreign And Interstate Commerce" and relating specifically to acts of
interstate transportation or its obstruction, makes no mention of the Sherman Act, which is made a
part of the Code which deals with social, economic and commercial results of interstate activity,
notwithstanding its criminal penalty."
10. Footnote 15 appears here: "The history of the Sherman Act, as contained in the legislative
proceedings, is emphatic in its support for the conclusion that "business competition" was the
problem considered, and that the act was designed to prevent restraints of trade which had a
significant effect on such competition. On July 10, 1888, the Senate adopted without discussion a
resolution offered by Senator Sherman which directed the Committee on Finance to inquire into, and
report in connection with, revenue bills "such measures as it may deem expedient to set aside,
control, restrain or prohibit all arrangements, contracts, agreements, trusts, or combinations between
persons or corporations, made with a view, or which tend to prevent free and full competition . . . with
such penalties and provisions . . . as will tend to preserve freedom of trade and production, the
natural competition of increasing production, the lowering of prices by such competition . . ." (19
Cong.Rec. 6041). This resolution explicitly presented the economic theory of the proponents of such
legislation. The various bills introduced between 1888 and 1890 follow the theory of this resolution.
Many bills sought to make void all arrangements "made with a view, or which tend, to prevent full
and free competition in the production, manufacture, or sale of articles of domestic growth or
production, . . ." S. 3445; S. 3510; H.R. 11339; all of the 50th Cong., 1st Sess. (1888) were bills of
this type. In the 51st Cong. (1889), the bills were in a similar vein. See S. 1, sec. 1 (this bill as
redrafted by the Judiciary Committee ultimately became the Sherman Law); H.R. 202, sec. 3; H.R.
270; H.R. 286; H.R. 402; H.R. 509; H.R. 826; H.R. 3819. See Bills and Debates in Congress relating
to Trusts (1909), Vol. 1, pp. 1025–1031. Only one, which was never enacted, S. 1268 in the 52d
Cong., 1st Sess. (1892), introduced by Senator Peffer, sought to prohibit "every willful act . . . which
shall have the effect to in any way interfere with the freedom of transit of articles in interstate
commerce, . . ." When the antitrust bill (S. 1, 51st Cong., 1st Sess.) came before Congress for
debate, the debates point to a similar purpose. Senator Sherman asserted the bill prevented only
"business combinations" "made with a view to prevent competition", 21 Cong.Rec. 2457, 2562; see
also ibid. at 2459, 2461. Senator Allison spoke of combinations which "control prices," ibid., 2471;
Senator Pugh of combinations "to limit production" for "the purpose of destroying competition", ibid.,
2558; Senator Morgan of combinations "that affect the price of commodities," ibid., 2609; Senator
Platt, a critic of the bill, said this bill proceeds on the assumption that "competition is beneficent to
the country," ibid., 2729; Senator George denounced trusts which crush out competition, "and that is
the great evil at which all this legislation ought to be directed," ibid., 3147. In the House,
Representative Culberson, who was in charge of the bill, interpreted the bill to prohibit various
arrangements which tend to drive out competition, ibid., 4089; Representative Wilson spoke in favor
of the bill against combinations among "competing producers to control the supply of their product, in
order that they may dictate the terms on which they shall sell in the market, and may secure release
from the stress of competition among themselves," ibid., 4090. The unanimity with which foes and
supporters of the bill spoke of its aims as the protection of free competition permits use of the
debates in interpreting the purpose of the act. See White, C.J. in Standard Oil Co. v. United States,
221 U. S. 50 (http://supreme.justia.com/us/221/1/case.html#50) Archived (https://web.archive.org/we
b/20090501033745/http://supreme.justia.com/us/221/1/case.html#50) 2009-05-01 at the Wayback
Machine; United States v. San Francisco, ante, p. 310 U. S. 16 (http://supreme.justia.com/us/310/16/
case.html) Archived (https://web.archive.org/web/20090525001628/http://supreme.justia.com/us/310/
16/case.html) 2009-05-25 at the Wayback Machine. See also Report of Committee on Interstate
Commerce on Control of Corporations Engaged in Interstate Commerce, S.Rept. 1326, 62d Cong.,
3d Sess. (1913), pp. 2, 4; Report of Federal Trade Commission, S.Doc. 226, 70th Cong., 2d Sess.
(1929), pp. 343–345."
11. See 15 U.S.C. § 1 (https://www.law.cornell.edu/uscode/text/15/1).
12. See 15 U.S.C. § 2 (https://www.law.cornell.edu/uscode/text/15/2).
13. States, United (26 March 2018). "Sherman Anti-trust Law and List of Decisions Relating Thereto" (htt
ps://books.google.com/books?id=UcJAAAAAYAAJ). U.S. Government Printing Office – via Google
Books.
14. "Archived copy" (http://repository.upenn.edu/cgi/viewcontent.cgi?article=1069&context=wharton_res

earch_scholars). Archived (https://web.archive.org/web/20150926031609/http://repository.upenn.ed
u/cgi/viewcontent.cgi?article=1069&context=wharton_research_scholars) from the original on 2015-
09-26. Retrieved 2016-03-08.
15. "United States v. General Electric Co., 82 F. Supp. 753 (D.N.J. 1949)" (https://law.justia.com/cases/fe
deral/district-courts/FSupp/82/753/1755675/). Justia Law. 4 April 1949. Retrieved 15 September
2019.
16. E.g., Richter Concrete Corp. v. Hilltop Basic Resources, Inc., 547 F. Supp. 893, 917 (S.D. Ohio
1981), (https://www.lexis.com/research/buttonTFLink?_m=c2cdaffd0ce470de6e524fd3149b710f&_xf
ercite=%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b54%20Fordham%20L.%20Re
v.%20247%5d%5d%3e%3c%2fcite%3e&_butType=3&_butStat=2&_butNum=322&_butInline=1&_bu
tinfo=%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b547%20F.%20Supp.%20893%2
cat%20917%5d%5d%3e%3c%2fcite%3e&_fmtstr=FULL&docnum=27&_startdoc=21&wchp=dGLzVt
b-zSkAB&_md5=79b43fe5414599f9b527852cc3923437) aff'd, 691 F.2d 818 (6th Cir. 1982); (https://
www.lexis.com/research/buttonTFLink?_m=c2cdaffd0ce470de6e524fd3149b710f&_xfercite=%3ccit
e%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b54%20Fordham%20L.%20Rev.%20247%5
d%5d%3e%3c%2fcite%3e&_butType=3&_butStat=2&_butNum=323&_butInline=1&_butinfo=%3ccit
e%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b691%20F.2d%20818%5d%5d%3e%3c%2fci
te%3e&_fmtstr=FULL&docnum=27&_startdoc=21&wchp=dGLzVtb-zSkAB&_md5=6b29ef5c9d547fa
7ec5db6b9e3d721ae) Consolidated Farmers Mut. Ins. Co. v. Anchor Sav. Association, 480 F. Supp.
640, 648 (D. Kan. 1979); (https://www.lexis.com/research/buttonTFLink?_m=c2cdaffd0ce470de6e52
4fd3149b710f&_xfercite=%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b54%20Fordh
am%20L.%20Rev.%20247%5d%5d%3e%3c%2fcite%3e&_butType=3&_butStat=2&_butNum=324&
_butInline=1&_butinfo=%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b480%20F.%20
Supp.%20640%2cat%20648%5d%5d%3e%3c%2fcite%3e&_fmtstr=FULL&docnum=27&_startdoc=2
1&wchp=dGLzVtb-zSkAB&_md5=e2b70f0ee5ddeea95366fc31069e1498) Mardirosian v. American
Inst. of Architects, 474 F. Supp. 628, 636 (D.D.C. 1979). (https://www.lexis.com/research/buttonTFLi
nk?_m=c2cdaffd0ce470de6e524fd3149b710f&_xfercite=%3ccite%20cc%3d%22USA%22%3e%3c%
21%5bCDATA%5b54%20Fordham%20L.%20Rev.%20247%5d%5d%3e%3c%2fcite%3e&_butType=
3&_butStat=2&_butNum=325&_butInline=1&_butinfo=%3ccite%20cc%3d%22USA%22%3e%3c%2
1%5bCDATA%5b474%20F.%20Supp.%20628%2cat%20636%5d%5d%3e%3c%2fcite%3e&_fmtstr=
FULL&docnum=27&_startdoc=21&wchp=dGLzVtb-zSkAB&_md5=6fd0f7818a17e24b32e8c0e6cbc4
083e)
17. United States v. Grinnell Corp., 384 U.S. 563, 570–71 (https://supreme.justia.com/cases/federal/us/3
84/563/#570–71) (1966); see also Weiss v. York Hosp., 745 F.2d 786 (https://law.justia.com/cases/fe
deral/appellate-courts/F2/745/786/128964/), 825 (3d Cir. 1984).
18. The truth is that our categories of analysis of anticompetitive effect are less fixed than terms like 'per
se,' 'quick look,' and 'rule of reason' tend to make them appear. We have recognized, for example,
that 'there is often no bright line separating per se from rule of reason analysis,' since 'considerable
inquiry into market conditions' may be required before the application of any so-called 'per se'
condemnation is justified. Cal. Dental Association v. FTC at 779 (quoting NCAA, 468 U.S. at 104
n.26). "'Whether the ultimate finding is the product of a presumption or actual market analysis, the
essential inquiry remains the same whether or not the challenged restraint enhances competition.'"
526 U.S. at 779–80 (quoting NCAA, 468 U.S. at 104).
19. Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 58 (https://supreme.justia.com/cases/federa
l/us/433/36/#58) (1977) (quoting Northern Pac. Ry. v. United States, 356 U.S. 1, 5 (https://supreme.ju
stia.com/cases/federal/us/356/1/#5) (1958)).
20. Broadcast Music, Inc. v. CBS, 441 U.S. 1, 19–20 (https://supreme.justia.com/cases/federal/us/441/1/
#19–20) (1979).
21. Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (https://supreme.justia.com/cases/federal/us/4
66/2/) (1984); Gough v. Rossmoor Corp., 585 F.2d 381 (https://law.justia.com/cases/federal/appellate
-courts/F2/585/381/424532/), 386–89 (9th Cir. 1978), cert. denied, 440 U.S. 936 (1979); see White
Motor v. United States, 372 U.S. 253, 259–60 (https://supreme.justia.com/cases/federal/us/372/253/
#259–60) (1963) (a per se rule forecloses analysis of the purpose or market effect of a restraint);
Northern Pac. Ry., 356 U.S. at 5 (same).
22. United States v. Trenton Potteries Co., 273 U.S. 392, 397–98 (https://supreme.justia.com/cases/fede
ral/us/273/392/#397–98) (1927).
23. Continental T.V., 433 U.S. at 50 n. 16 (limiting United States v. Topco Assocs., 405 U.S. 596, 608 (htt
ps://supreme.justia.com/cases/federal/us/405/596/#608) (1972) by making vertical market division
rule-of-reason analysis).
24. FTC v. Superior Court Trial Lawyers Ass'n, 493 U.S. 411 (https://supreme.justia.com/cases/federal/u
s/493/411/) for collusive effects and NW Wholesale Stationers, Inc. v. Pacific Stationery & Printing
Co., 472 U.S. 284 (https://supreme.justia.com/cases/federal/us/472/284/) (1985) for exclusionary
effects.
25. Continental T.V., 433 U.S. at 49. The inquiry focuses on the restraint's effect on competition. National
Soc'y of Professional Eng'rs v. United States, 435 U.S. 679, 691 (https://supreme.justia.com/cases/fe
deral/us/435/679/#691) (1978).
26. National Soc'y of Professional Eng'rs, 435 U.S. at 692.
27. See Continental T.V., 433 U.S. at 45 (citing United States v. Arnold, Schwinn & Co., 388 U.S. 365,
382 (https://supreme.justia.com/cases/federal/us/388/365/#382) (1967)), and geographic market,
see United States v. Columbia Steel Co., 334 U.S. 495, 519 (https://supreme.justia.com/cases/feder
al/us/334/495/#519) (1948).
28. Continental T.V., 433 U.S. at 49; see Standard Oil Co. v. United States, 221 U.S. 1, 58 (https://supre
me.justia.com/cases/federal/us/221/1/#58) (1911) (Congress only intended to prohibit agreements
that were "unreasonably restrictive of competitive (conditions").
29. Cal. Dental Ass'n, 526 U.S. at 770.
30. See Loewe v. Lawlor, 208 U.S. 274 (https://supreme.justia.com/cases/federal/us/208/274/) (1908).
31. "Archived copy" (http://www.polyconomics.com/index.php?option=com_content&view=article&id=160
5:antitrust-by-alan-greenspan&catid=47:1998). Archived (https://web.archive.org/web/201405101244
41/http://www.polyconomics.com/index.php?option=com_content&view=article&id=1605:antitrust-by-
alan-greenspan&catid=47:1998) from the original on 2014-05-10. Retrieved 2012-05-19.
32. Criticisms such as this one, attributed to Greenspan, are not directed at the Sherman act in
particular, but rather at the underlying policy of all antitrust law, which includes several pieces of
legislation other than just the Sherman Act, e.g. the Clayton Antitrust Act.
33. Check Your Premises, The Objectivist Newsletter, January 1962, vol. 1, no. 1, p. 1
34. Capitalism: The Unknown Ideal, Ch. 3, New American Library, Signet, 1967
35. Congressional Record, 51st Congress, 1st session, House, June 20, 1890, p. 4100.
36. "Mr. Sherman's Hopes and Fears" (https://timesmachine.nytimes.com/timesmachine/1890/10/01/103
268337.pdf) (PDF). The New York Times. 1890-10-01. Retrieved 2008-04-21.
37. DiLorenzo, Thomas, Cato Handbook for Congress, Antitrust.
38. Richard Posner, Economic Analysis of Law, p. 295 et seq. (explaining the optimal antitrust regime
from an economic point of view)
39. Douglas, William O., An Almanac of Liberty, Doubleday & Company, 1954, p. 189
40. Newman, Patrick (2018-01-12). "Revenge: John Sherman, Russell Alger and the origins of the
Sherman Act". Public Choice. 174 (3–4): 257–275. doi:10.1007/s11127-017-0497-x (https://doi.org/1
0.1007%2Fs11127-017-0497-x). ISSN 0048-5829 (https://www.worldcat.org/issn/0048-5829).
"Labor and the Sherman Act" (1940). Yale Law Journal 49(3) p. 518. JSTOR 792668 (https://www.jst
or.org/stable/792668).
External links
Official websites
U.S. Department of Justice: Antitrust Division (https://www.usdoj.gov/atr/)

U.S. Department of Justice: Antitrust Division – text of SHERMAN ANTITRUST ACT, 15 U.S.C. §§
1–7 (https://www.justice.gov/atr/file/761131/download)
Additional information
Antitrust Division's "Corporate Leniency Policy" (https://www.usdoj.gov/atr/public/guidelines/lencorp.h

tm)
Antitrust (http://www.polyconomics.com/index.php?option=com_content&view=article&id=1605:antitr
ust-by-alan-greenspan&catid=47:1998&Itemid=31) by Alan Greenspan
Dr. Edward W. Younkins (February 19, 2000). "Antitrust Laws Should Be Abolished" (http://www.queb
ecoislibre.org/000219-13.htm).
Retrieved from "https://en.wikipedia.org/w/index.php?title=Sherman_Antitrust_Act_of_1890&oldid=948115124"
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What is the Sherman Antitrust Act?

What is the Sherman Antitrust Act?

What are the main provisions of the Sherman Antitrust Act?

What are the main provisions of the Sherman Antitrust Act?

4/8/2020 Sherman Antitrust Act of 1890 - Wikipedia

Sherman Antitrust Act of 1890

The Sherman Act broadly prohibits (1) anticompetitive agreements

Manipulation of market Hale v. Henkel, 201 U.S. 43 (http

“ The purpose of the [Sherman] Act is not to protect

“ ... [a person] who merely by superior skill and

interferences with interstate transportation, or

At Standard Oil Co. of New Jersey v. United States, 221 U. S. 1 (http://supreme.justia.com/us/221/1/ca

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint

Every person who shall monopolize, or attempt to monopolize, or combine or conspire

Subsequent legislation expanding its scope

Notable cases filed under the act include:[13]

Constitutional basis for legislation

A Section 1 violation has three elements:[16]

A Section 2 monopolization violation has two elements:[17]

(1) the possession of monopoly power in the relevant market; and

(1) qualifying exclusionary or anticompetitive acts designed to establish a monopoly

Violations "per se" and violations of the "rule of reason"

Violations of the Sherman Act fall (loosely[18]) into two categories:

Application of the act outside pure commerce

Preemption by Section 1 of state statutes that restrain

14. "Archived copy" (http://repository.upenn.edu/cgi/viewcontent.cgi?article=1069&context=wharton_res

U.S. Department of Justice: Antitrust Division (https://www.usdoj.gov/atr/)

Antitrust Division's "Corporate Leniency Policy" (https://www.usdoj.gov/atr/public/guidelines/lencorp.h

Retrieved from "https://en.wikipedia.org/w/index.php?title=Sherman_Antitrust_Act_of_1890&oldid=948115124"

This page was last edited on 30 March 2020, at 06:41 (UTC).

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