What did the antitrust laws get rid of?
The Sherman Antitrust Act was enacted in 1890 to curtail combinations of power that interfere with trade and reduce economic competition. It outlaws both formal cartels and attempts to monopolize any part of commerce in the United States.
The Sherman Antitrust Act
This Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids, and allocate customers, which are punishable as criminal felonies.
Antitrust Laws Are Against Innovation
The problem with antitrust laws is that it prevents the company from growing beyond a certain point. Hence, the company with the maximum resources, which can invest the maximum amount, is prohibited from growing. As a result, technological development stagnates.
Section 2 of the Sherman Act makes it unlawful for any person to "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 . . . ."
The core of U.S. antitrust law was created by three pieces of legislation: the Sherman Antitrust Act, the Federal Trade Commission Act, and the Clayton Antitrust Act.
The trusts speeded up mergers and eliminated competition among their members. They also concentrated control of national wealth in the hands of a few millionaire families. As monopolies, the trusts often could dictate whatever prices and wages they wanted with little fear of competition.
Yet for over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.
The Sherman Antitrust Act paved the way for more specific laws like the Clayton Act. Measures like these had widespread popular support, but lawmakers genuinely wanted to keep the American market economy broadly competitive in the face of changing business practices.
Antitrust laws regulate the concentration of economic power to prevent companies from price colluding or creating monopolies. Proponents of antitrust laws argue that they keep consumer prices lower and foster innovation through increased competition.
Aside from banning the practices of price discrimination and anti-competitive mergers, the new law also declared strikes, boycotts, and labor unions legal under federal law.
How did antitrust lose its goals?
During the first seven decades following the enactment of the Sherman Act, competition was the uncontroversial goal of antitrust. The introduction of the consumer welfare standard led to the dissipation of “competition” as the goal of U.S. competition laws.