Antitrust Laws In the United States

The first laws countering what were considered to be unfair business practices were passed by several Midwestern states during the 1870's to regulate railways. It was many years before federal legislation accomplished the goal of railway regulation.

During the business expansion that followed the Civil War, many manufacturing firms employed practices objectionable to the public, principally the creation of business trusts that monopolized the production and distribution of commodities such as oil and sugar. By 1890 the public outcry against monopolistic activities was such that Congress passed the Sherman Antitrust Act. During the next few years, however, interpretations of this law by the Supreme Court severely limited its effectiveness in dealing with large business combinations and with practices that were not specifically mentioned in the act. The Clayton Antitrust Act and the Federal Trade Commission Act were both passed in 1914. These laws specified unfair business practices and the procedures for preventing them or prosecuting violators, thus supplementing the broad and unspecific language of the Sherman Antitrust Act.

During World War I, the antitrust laws were suspended to allow companies to cooperate in order to aid the war effort. Following the war, a booming economy made public opinion favorable to big business, and there was little enforcement of antitrust legislation. Then, during the Great Depression, passage of the Robinson-Patman Act (1936), which forbade certain pricing practices that applied particularly to chain stores, ushered in a new period of antitrust activity. After another suspension of antitrust laws, during World War II, the government resumed prosecuting antitrust cases. The great economic growth of the late 1950's and the 1960's led to the government paying more attention to preventive antitrust procedures, particularly to reviewing proposed mergers.

During the 1980's, the antitrust laws were not rigorously enforced. Corporate mergers and acquisitions greatly increased. In the 1990's there was a resurgence in federal antitrust prosecutions.