The Sherman Act: Contracts and Monopolies

The Sherman Act, as amended by the Clayton Act, seeks to preserve competition by declaring two types of anticompetitive behavior illegal. These two types are Contracts in restraint of trade or commerce and monopolies and attempts to monopolize. The Sherman Act was general and did not define trust, monopoly, or restraint of trade. Section 1 of the Sherman Act prohibits contracts, combinations, and conspiracies in restraint of trade or commerce.

Contracts in restraint of trade result from verbal or written agreements and combinations usually result from conduct, while conspiracies are established by agreement and then by some act of following out the agreement of conspiracy. Contracts may be implied to be considered a restraint of trade. An example of a restraint of trade is price fixing, which is when competitors agree to charge the same price for a product. These actions are anticompetitive and put a restraint on trade. In these cases, circumstantial evidence may be used to prove a conspiracy. For example, if three liquor stores all raise the price on a certain alcohol products on the same day during a time of declining sales, it is pretty obvious what is going on; price0-fixing.

Monopoly and the attempts to monopolize any part of interstate commerce or foreign commerce are illegal according to the Sherman Act. The law makes it clear and has the means to break up monopolies and to stop others from becoming monopolies. Monopoly cases require proof that there has been an attempt to destroy their competition or gain monopoly power. These cases tend to be very hard to prove and that is why there are not very many of these cases.

Antitrust laws are enforced by the federal and state governments. The federal governments enforcement procedures are utilized by the FTC (Federal Trade Commission) and the Department of Justice. The Department of Justice has the power to enforce the criminal process, but it shares its civil law enforcement powers with the FTC.

State government may also bring charges under the Sherman Act to enforce antitrust laws, while private parties can bring civil lawsuits to seek monetary damages while trying to enforce antitrust laws. Private parties may include businesses or simply individuals seeking to enforce antitrust laws.

Reed, Shedd, Morehead, and Corley
The legal and regulatory environment of business

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