Sherman Act of 1890

The Sherman Act prohibits contracts and conspiracies in restraint of trade among U.S. states or with foreign nations and forms the essential foundation of all U.S. antitrust law. It also makes it illegal for any business to monopolize, or attempt to monopolize, trade or commerce.

A company violates the law when it tries to maintain or acquire a monopoly position through unreasonable methods such as price fixing, bid-rigging, or other cartel activities. For the courts, a key factor in determining what is unreasonable is whether the practice has a legitimate business justification. Violations of the act can be tried in civil court -- where fines may be imposed or a court order issued to prohibit the unfair practice -- or in criminal court -- where both fines and imprisonment can be imposed. The Sherman Act provides that corporations may be fined up to $10 million and other defendants up to $350,000; individuals may be sentenced up to three years in prison.

Federal Trade Commission Act of 1914

Under the Federal Trade Commission Act, which created the Federal Trade Commission (FTC), the commission is empowered, among other things, to prevent unfair competition and deceptive practices. The FTC can require businesses to pay consumers for harm done. It does its job by writing regulations and conducting investigations.

Clayton Act of 1914

The Clayton Act elaborates on the Sherman Act and prohibits such activities as: price discrimination -- selling the same commodity to different buyers at different prices; exclusive dealing -- holding a retailer or wholesaler to a single supplier on the understanding that no other distributor will receive supplies in a given area; interlocking directorates -- holding by an individual of directorships in two or more competing companies; and companies holding competitors' stocks. It also prohibits mergers and acquisitions where the effect is to lessen competition or to tend toward monopoly. It gives the U.S. Justice Department and the FTC authority to block any merger that would violate antitrust laws.

Hart-Scott-Rodino Antitrust Improvements Act of 1976

The Hart-Scott-Rodino Act amended the Clayton Act by requiring companies to notify the FTC and the Justice Department's Antitrust Division before most mergers and acquisitions are consummated. It gives the enforcement agencies time to examine the competitive consequences of the proposed mergers. They might require that the merging parties sell off some of their assets, or they might block the merger entirely. Failure to comply with pre-merger notification is punishable with penalties of up to $10,000 for each day a violation continues.

National Cooperative Research and Production Act of 1993

This act establishes some antitrust protections for certain joint research and development ventures by companies in the same industry when they file prior written notification with the Justice Department and the FTC.

Webb-Pomerene Act

The Webb-Pomerene Act provides a limited antitrust exemption for formation and operation of associations of otherwise competing businesses to engage in collective export sales.

International Antitrust Enforcement Assistance Act of 1994

This law authorizes the FTC and the Justice Department to enter into mutual assistance agreements with foreign antitrust authorities. Under such agreements, U.S. and foreign authorities may share, subject to certain restrictions, evidence of antitrust violations and assist each other in investigations.

Economic Perspectives
USIA Electronic Journal, Vol. 4, No. 1, February 1999