Sherman Antitrust Act

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The Sherman Antitrust Act (shortened to Sherman Act) passed by Congress in 1890 is the basic federal antitrust law. It prohibits any unreasonable interference, conspiracy, restraint of trade, or monopolies with respect to interstate commerce.

see Antitrust law

The Act consists of two sections:

Contents

Section One

Section One prohibits agreements, express or implied, that restrain trade unreasonably.

"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. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court." 15 U.S.C. § 1.

This law is usually enforced by a lawsuit brought by one company against another. In such a civil lawsuit, the plaintiff can win only if it proves all of the following:

(1) Concerted action by defendants that (2) produce anticompetitive effects within the relevant product and geographic markets; (3) that the concerted action was illegal (unreasonable) and that (4) plaintiff was injured as a proximate result of the concerted action. See, e.g., Gordon v. Lewistown Hospital, 423 F.3d 184, 207 (3d Cir. 2005) (citing Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1229 (3d Cir. 1993))

Section Two

Sherman Act Section Two prohibits monopolization, attempts to monopolize and conspiracies to monopolize any aspect of interstate trade or commerce.

"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, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court." 15 U.S.C. § 2.

As with Section One of the Sherman Act, Section Two is typically enforced by one firm suing another in a civil lawsuit. To prevail under Section Two, a plaintiff must prove all of the following:

(1) an agreement or understanding between two or more parties and (2) a specific intent to monopolize and (3) overt acts in furtherance of the alleged conspiracy. See, e.g., Robinson v. Magovern, 521 F.Supp. 842, 892 (W.D. Pa. 1981).

In at least the Second and Third Circuits, proof of a dangerous likelihood of monopolization is not required. See Deborah Heart & Lung Ctr. v. Penn Presbypyterian Med. Ctr., 2011 U.S. Dist. LEXIS 149664 (D.N.J. Dec. 30, 2011).

see also

Further reading

  • Letwin, William. Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act (1965)
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