Sherman Antitrust Act

See also Antitrust law.

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. This law is considered one of the finest and most successful in American history ever enacted by Congress, and was Republican-sponsored.

The Act consists of two sections:

Section One[edit]

Theodore Roosevelt steals the anti-trust issue from the Democrats, 1904.

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[edit]

Sherman Act Section Two prohibits monopolization, attempts to monopolize and conspiracies to monopolize any aspect of interstate trade or commerce. Section Two is in reported court decisions only about 3/5ths as often as Section One cases are. (about 6,000 Section 2 cases compared with about 10,000 Section 1 cases, and courts usually use the numeric reference "2" rather than "Two".) In more than a century, the U.S. Supreme Court has addressed only 47 Section 2 cases, and the Fifth Circuit has addressed only 129 such cases.

"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 one type of Section Two claim, 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 Presbyterian Med. Ctr., 2011 U.S. Dist. LEXIS 149664 (D.N.J. Dec. 30, 2011).

To prevail under another type of Section Two claim, "Both the possession of monopoly power and its willful misuse are necessary to sustain a charge of illegal monopolization under Section 2 of the Sherman Act." United States v. S. Motor Carriers Rate Conference, Inc., 672 F.2d 469, 484 (5th Cir. 1982).

In the Fifth Circuit, the elements of wrongful monopolization are:

Retractable Techs., Inc. v. Becton Dickinson & Co., 842 F.3d 883, 891 (5th Cir. 2016).

Sherman Section Two precedents[edit]

• United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S. Ct. 1698, 1704, 16 L. Ed. 2d 778 (1966).
• Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 271-76 (2d Cir. 1979), cert. denied, 444 U.S. 1093, 100 S. Ct. 1061, 62 L. Ed. 2d 783 (1980).
• United States v. Griffith, 334 U.S. 100, 107-08, 68 S. Ct. 941, 945-46, 92 L. Ed. 1236 (1948).
• Smith-Kline Corp. v. Eli Lilly & Co., 575 F.2d 1056 (3d Cir.), cert. denied, 439 U.S. 838, 99 S. Ct. 123, 58 L. Ed. 2d 134 (1978).
• Pacific Coast Agricultural Export Association v. Sunkist Growers, Inc., 526 F.2d 1196 (9th Cir. 1975), cert. denied, 425 U.S. 959, 96 S. Ct. 1741, 48 L. Ed. 2d 204 (1976).

See also[edit]

• Antitrust law

Further reading[edit]

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