The Sherman Antitrust Act and How it Affects Business
Throughout the history of the United States, the Sherman Antitrust Act has significantly impacted how business is run. The Act’s enactment has helped reform the economy, especially in the oil industry. For example, after the Act was passed, Standard Oil was reformed. The company was able to sell more products and more customers. The Act also impacted other businesses, such as Bell Atlantic Corp., whose management challenged the law in a lawsuit.
Bell Atlantic Corp. v Twombly
During the case trial, Bell Atlantic presented a 12(b)6 motion to dismiss, arguing that Twombly’s claim did not state a sufficiently clear and concise statement of the facts to withstand a motion for summary judgment. The District Court granted the motion, dismissing the plaintiff’s claim for failure to state a claim.
The District Court did not believe the complaint’s claims that the defendants conspired to prevent other CLECs from entering the local phone market. Bell Atlantic argued that the other defendants were conspiring to do the same. However, the Court of Appeals disagreed, citing Bell Atlantic’s “stupid” argument that the plaintiff’s assertions were too obvious to be tested on summary judgment.
The court cited several other factors in dismissing Twombly’s suit. In particular, the 2nd Circuit referred to several factual allegations. The court also noted that the Iqbal case reaffirmed a heightened standard for evaluating pleadings in federal court.
Standard Oil reformed after the Sherman Antitrust Act
During the early 20th century, Standard Oil was a massive conglomerate controlling almost all American petroleum market. Its name was the symbol of reliability and service. Its monopoly had attracted the attention of regulators and reformers.
The United States government filed a lawsuit against Standard Oil Company (New Jersey) in 1906. It accused the company of engaging in illegal monopoly practices and coercing competitors to join the company. It was later ruled that the company violated the Sherman Antitrust Act. The court ordered the company to split into 34 separate companies.
During the Progressive Era, critics of corporations criticized the concentration of economic power. Standard Oil, in particular, was accused of building up enormous fortunes on the ruins of other men. In response, Americans sought to restore competition in the oil industry. The government was charged with finding a way to break up the giant.
Sections 1 and 2
Trying to monopolize trade in the United States is illegal, and the Sherman antitrust act provides remedies for these violations. This Act applies to large and small businesses, from multinational corporations to mom-and-pop stores in the country’s heartland.
The federal govern successfully enforcedenforcing Section 2 of the Act. For example, the Department of Justice has filed hundreds of complaints to deconcentrate dozens of industries and stifle monopolistic practices.
The FTC has been far more willing to exercise its Section 2 authority. While the government has made some mistakes in recent years, it is time for Congress to take another look at the law.
There are two main reasons why Section 2 is so important. First, the laws of physics suggest that a monopoly is bad for consumers. Second, the competitive process is dynamic, and firms using lawful means can reap the rewards of their market position.
During the formative era of antitrust law, the Sherman Antitrust Act was a significant source of legal precedent. It was used successfully in the “trust-busting” campaigns of Teddy Roosevelt.
The Sherman Antitrust Act of 1890, named after Senator John Sherman, prohibits certain acts believed to have an anticompetitive effect on the market. The Act is divided into three sections.
Section 1 deals with specific acts of anticompetitive conduct. It prohibits mergers that reduce the number of competitors in a market. The other two sections deal with the results of such actions.
Both sections require proof that the defendant has willfully acquired power. Generally, a plaintiff must show that the conduct occurred during interstate commerce and that the effects of the behavior unreasonably restrain trade.
The Act also addresses state-imposed restraints. Congress passed the Act to promote economic liberty. Accordingly, the Act does not prevent states from regulating private parties that may impose reasonable restrictions on intrastate commerce.