History of Anti-Trust Legislation & Court Cases
In the late nineteenth century, the United States of America saw companies flourish. Advances in technology greatly increased output and lowered costs of many goods; people were also making more money and the nation was truly prospering. Due to the booming economy, a great deal of changes occurred. Companies started to grow at a faster rate, and soon there were enormous companies that seemed to rule their individual industries. It quickly became apparent that some firms were monopolizing the industries, making prices higher and lessening the competitiveness of the market. Many companies were also fixing prices, forcing other businesses to pay ridiculous amounts since they had no other options. Thus, it was decided something needed to be done in order to make pricing more fair and improve the competitive nature of the market. The goal of anti-trust legislation is to prevent monopolies that can control the markets. In this, the government is trying to help facilitate competition in order to guarantee better prices for consumers and more of a chance for other firms to enter the industries. A group of organized farmers, called the Grangers, got together and pushed for government intervention in regulating the railroad industry. At the time, the railroad was charging ridiculous rates and the farmers could not afford to keep up with the prices in order to transport their products. The Interstate Commerce Act (1887) was the first attempt from the government to help regulate businesses. It was "devised to apply technical expertise and a semijudicial and less partisan approach to the regulation of complex affairs." It required the all railroads that passed through more than one state charge fair rates and handle their business in a just manner. It also made pools, discriminatory rates, drawbacks, and rebates illegal. From this act, the Interstate Commerce Commission was also introduced; one of their first orders of business was to ensure that companies were charging appropriate rates and to help prevent monopolies. The Sherman Anti-Trust Act was the first piece of legislation that made monopolies illegal. Passed on July 1, 1890 under President Benjamin Harrison, the Sherman Anti-Trust Act laid out certain laws that break up monopolies. It gave Congress the power to dissolve monopolies. The act also stated that: “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 hereby declared to be illegal… [and that]…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 misdemeanor…”
In 1974, however, the punishment was changed from charge for a misdemeanor to a felony charge. They also raised the fines and distinguished a difference in punishment based on whether an individual or a corporation was charged. Initially, the act was not strictly enforced. There was also no clear definition of what a trust is; therefore it was hard to determine what was illegal and what was not in certain situations. Certain legislation still needed to be worked out; there were a lot of issues concerning whether or not holding companies were included under the act as well. Shortly after the Sherman Anti-Trust Act was passed, there was a boom in mergers and acquisitions, and huge trusts began to form. Thus, there is the question as to whether or not the Sherman Anti-Trust Act initially had the opposite affect on controlling trusts than it had intended. At this time, there was a great deal of mergers and acquisitions where corporations would buy out other smaller corporations in order to help the smaller companies survive in the industry. However, as a corporation acquires more and more smaller companies or...
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Problems of Enforcement and Interpretation of the Sherman Act (in The Sherman Act and the Enforcement of Competition)
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Stable URL: http://links.jstor.org/sici?sici=0002-8282%28194805%2938%3A2%3C172%3APOEAIO%3E2.0.CO%3B2-X
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