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Sherman Antitrust Act

The Sherman Antitrust Act of 1890[1] (26 Stat. 209, 15 U.S.C. §§ 1–7) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce and consequently prohibits unfair monopolies. It was passed by Congress and is named for Senator John Sherman, its principal author.

Long title

An Act to protect trade and commerce against unlawful restraints and monopolies

the 51st United States Congress

Pub. L.Tooltip Public Law (United States) 51–647

26 Stat. 209

Title 15—Commerce and Trade

15 U.S.C. §§ 1–7

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 of Justice to bring suits to enjoin (i.e. prohibit) conduct violating the Act, and additionally authorizes private parties injured by conduct violating the Act to bring suits for treble damages (i.e. three times as much money in damages as the violation cost them). Over time, the federal courts have developed a body of law under the Sherman Act making certain types of anticompetitive conduct per se illegal, and subjecting other types of conduct to case-by-case analysis regarding whether the conduct unreasonably restrains trade.


The law attempts to prevent the artificial raising of prices by restriction of trade or supply.[2] "Innocent monopoly", or monopoly achieved solely by merit, is legal, but acts by a monopolist to artificially preserve that status, or nefarious dealings to create a monopoly, are not. The purpose of the Sherman Act is not to protect competitors from harm from legitimately successful businesses, nor to prevent businesses from gaining honest profits from consumers, but rather to preserve a competitive marketplace to protect consumers from abuses.[3]

Provisions[edit]

Original text[edit]

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.

United States v. Workingmen's Amalgamated Council of New Orleans (1893), which was the first to hold that the law applied to labor unions.

Chesapeake & Ohio Fuel Co. v. United States (1902), in which the trust was dissolved

[13]

(1904), which reached the Supreme Court, dissolved the company and set many precedents for interpretation.

Northern Securities Co. v. United States

(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.

Hale v. Henkel

(1911), which broke up the company based on geography, and contributed to the Panic of 1910–11.

Standard Oil Co. of New Jersey v. United States

(1911), which split the company into four.

United States v. American Tobacco Co.

United States v. General Electric Co (1911), where GE was judged to have violated the Sherman Anti-Trust Act, along with International General Electric, , Sylvania, Tungsol, and Consolidated and Chicago Miniature. Corning and Westinghouse made consent decrees.[14]

Philips

(2010), where nurses alleged Albany Medical Center suppressed their wages in violation of the Sherman Anti-Trust Act, by sharing wage information with other area hospitals. References: (1) Casetext Fleischman vs Albany Medical Center (2) Justia Docket No. 10-0846-mv

Fleischman vs Albany Medical Center

(1915), which ruled that the company was abusing its monopolistic rights, and therefore, violated the Sherman act.

United States v. Motion Picture Patents Co.

(1922) in which the Supreme Court ruled that Major League Baseball was not interstate commerce and was not subject to the antitrust law.

Federal Baseball Club v. National League

United States v. National City Lines (1953), related to the .

General Motors streetcar conspiracy

, which was settled in 1982 and resulted in the breakup of the company.

United States v. AT&T Co.

(1990) Judge Getzendanner issued her opinion that the AMA had violated Section 1, but not 2, of the Sherman Act, and that it had engaged in an unlawful conspiracy in restraint of trade "to contain and eliminate the chiropractic profession."

Wilk v. American Medical Association

was settled in 2001 without the breakup of the company.

United States v. Microsoft Corp.

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:[12]

Legal application[edit]

Constitutional basis for legislation[edit]

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[edit]

A Section 1 violation has three elements:[15]

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." , 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.")

Rice v. Norman Williams Co.

Second, they will consider whether the state statute is saved from preemption by the (aka Parker immunity). In California Retail Liquor Dealers Ass'n 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).

state action immunity doctrine

as amended (PDF/details) in the GPO Statute Compilations collection

Sherman Act