Question

Be sure to incorporate scholarly/peer-reviewed sources and cite them properly in your posts. Discuss the background...

Be sure to incorporate scholarly/peer-reviewed sources and cite them properly in your posts.


Discuss the background and enforcement of the Sherman Act, the Clayton Act, and the FTC Act.


Discuss how the Clayton Act strengthens the Sherman Act. Discuss monopolies and mergers.


Do you think it is possible to acquire a monopoly position solely by virtue of hard work?


Use the Library to find a recent case involving claims of monopolization. Briefly explain why it is important to the discussion for this week.


Homework Answers

Answer #1

antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote competition for the benefit of consumers. (The concept is called competition law in other English-speaking countries.) The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These Acts serve three major functions. First, Section 1 of the Sherman Act prohibits price-fixing and the operation of cartels, and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that would likely substantially lessen competition. Third, Section 2 of the Sherman Act prohibits the abuse of monopoly power.

Preventing collusion and cartels that act in restraint of trade is an essential task of antitrust law. It reflects the view that each business has a duty to act independently on the market, and so earn its profits solely by providing better priced and quality products than its competitors. The Sherman Act §1 prohibits very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.

Some practices are deemed by the courts to be so obviously detrimental that they are categorized as being automatically unlawful, or illegal per se. The simplest and central case of this is price fixing. This involves an agreement by businesses to set the price or consideration of a good or service which they buy or sell from others at a specific level. If the agreement is durable, the general term for these businesses is a cartel. It is irrelevant whether or not the businesses succeed in increasing their profits, or whether together they reach the level of having market power as might a monopoly. Such collusion is illegal per se.

  • United States v. Trenton Potteries Co., 273 U.S. 392 (1927) per se illegality of price fixing
  • Appalachian Coals, Inc. v. United States, 288 U.S. 344 (1933)
  • United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940)

President Theodore Roosevelt sued 45 companies under the Sherman Act, while William Howard Taft sued 75. In 1902, Roosevelt stopped the formation of the Northern Securities Company, which threatened to monopolize transportation in the Northwest

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