Sherman Antitrust act Essay

Introduction

Due to his expertise in the regulation of commerce and the fact that he was the first to suggest the act, the Sherman Antitrust act, which was approved by the US congress in 1890, was named after US Senator John Sherman. The law had earlier been passed by a number of states, but only for intrastate use. The law gave Congress the power to regulate local businesses. The act gave retail shareholders in different organizations a way to transfer their individual dividend payments to a single group of trustees in exchange for certificates entitling them to a limited number of shares of the combined revenue of the cooperatively controlled organizations. Under the Sherman Act, the National government was allowed to establish litigation against the trusts so as to disband them because their monopolistic nature destroyed competition in the market.

Provisions of the Sherman Antitrust Act

Corporations that were formed by companies inform of trusts were therefore rendered illegal; any individual who went against it was subjected to a fine of $5,000 or one year in prison. Enterprises or persons who suffered losses due to trusts were authorized to institute legal proceedings in the federal courts for triple damages. The act failed to properly define terms such as trusts, combination, conspiracy, and monopoly hence few businesses were prosecuted under it. The law was dismantled when the court ruled in favor of E. C. Knight Company in 1985. However, recently the act has been used successfully in some of the court cases such as dissolving the Northern Securities Company trust during the case between them and the state in 1904. The government has used the same act against the Microsoft computer software company.

Purpose of the Sherman Antitrust Act

What the act was designed to accomplish

The legislation was passed at a period where there was the existence of extreme public antagonism towards substantial companies such as Standard Oil Company (SOC) and American Railway union (ARU) that were conducting their businesses unfairly by monopolizing particular industries. The turmoil arose from both the consumers, who were being affected by the overrated prices on essential goods and competitors in manufacturing who were being shut out of the industry due to deliberate attempts by individual companies to keep other businesses out of the market. The act was, therefore, meant to protect freedom of competition and defend the interests of both consumers and competitive production companies by stopping individual businesses from devising the sole power over one industry. The law was meant to accomplish the task of dissolving trust trade agreements which made companies only trade between themselves resulting in monopolization.

Bibliography

“Sherman Anti-Trust Act (1890).” Our Documents - Sherman Anti-Trust Act (1890). Accessed July 19, 2017. https://www.ourdocuments.gov/doc.php?flash=true&doc=51.