The government is mandated to ensure the best interests of its citizenry are protected at all times, and there are no unfair practices in the market that are injurious to its people. This is made possible through various means including legislation to control certain elements and aspects of trade. The Sherman antitrust act is one such regulation.
The Sherman antitrust act was passed in 1890 under the presidency of Benjamin Harrison. The act prohibits anticompetitive agreements as well as unilateral conduct that either monopolizes or attempts to monopolize the market. The act also made it possible to sue organizations for any losses resulting from these practices outlawed herein. In the wake of the 19 th century, various giants rose within the American market such as JP Morgan in Banking, John D Rockefeller in the Oil industry among others. In a bid to control the market, trusts gain dominance by working out to eliminate competition. While this may be good for the organization, it can easily be misused since the organization can lower quality or raise profits at will without losing its clientele. A monopoly is when there is only a single provider of a given service or product in the market. This could arise due to the massive amounts of capital needed to venture into that market as well as patents that protect the original companies.
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Trusts and monopolies can easily engage in destructive and unfair competition. When a single company dominates over a market, it can easily employ unfair tactics and, being one, the customers are left without a choice but stick to it. Monopolies and trusts can easily collude with market stakeholders to slash prices, drive away competitors and later raise the prices to the detriment of the customers. Monopolies can easily engage in unethical practices as well without losing any significant market shares. To protect consumers from such, the Sherman antitrust act was passed. Over time there have been slight adjustments to this regulation around market practices, as contained in the Clayton Act which covers practices such as tying arrangements and exclusive dealing agreements that were overlooked by the Sherman Act. The Robinson-Patman Act is an adjustment to Clayton act regulating price discrimination.
Over the years, several cases have been filed based on this act. Some of these cases are what informed the subsequent acts as loopholes in the legislation were noted. Notable corporations such as Standard Oil, AT&T Co, Microsoft Corp have been sued. Some survived litigation while others such as AT&T ended up breaking. American Tobacco Co ended up being four companies after the litigation. There have been challenges in the enforcement of the regulation as a result of monopolies which are termed innocent monopolies, whereby certain companies may dominate the market passively as opposed to the bold discriminatory pattern that was envisioned earlier on. There has also been criticism of the act as it is termed as one that stifles competition and kills innovation. Others have accused the judiciary of being manipulated to favor empire builders while remaining hostile to the spirit of the Sherman act (Orlando, 2009).
For any meaningful and harmonious coexistence, it is needful that the commoners be protected from the high and mighty in society. The Sherman act in a small way has achieved this. At the same time, markets need to be free enough to allow competition and innovation. A balance must be struck between being overly protective of the consumers and too much aggression from businesspeople that drives everyone out of the market. The Sherman act serves to not so much slow the market, but offer protection in case the market fails.
References
Orlando, A. (2009). An Early Assesment Of THe Sherman Antitrust Act; Three Case Studies. University Of Pennsylvania; Scholarly Commons. , 1-33.
