Business Regulation Sherman AntiTrust Act Monopolies and Trusts

Business Regulation Sherman Anti-Trust Act Monopolies and Trusts Federal Trace Commission

In 1800, the industrial revolution had hardly taken hold in the USA. Most people, by far, lived on farms and made their living as farmers. Mr. N’s Great-Grandparents

Industrial Revolution By 1900, though, the USA was highly industrialized – Railroads, Steel Production – Automobiles – Oil Production, etc.

The industrial cities of the Northeast grew and grew – Detriot – Chicago – Cleveland- Pittsburgh – etc.

Big Business The rapid industrial growth in the 1800’s brought with it the phenomenon of BIG BUSINESSES BIG The Big Businesses got so – that it caused some real problems – problems that societies had never really had to deal with before.

Monopolies The Biggest of the Big got so BIG that they were in some cases able to pretty much but out put of business all of their competitors.

When a business has pretty much wiped out all of its competitors. . . It is said to have a “Monopoly” Monopoly

BUSINESS TRUSTS Sometimes businesses that were in competition with one another made deals where they both or all agreed to keep their prices high. This is a type of Business Trust known as ‘Price Fixing”

BUSINESS TRUSTS Or. . . say a manufacturer bought a railroad and refused to ship the goods of businesses that were in competition with them. These is also a. . . BUSINESS TRUST

Robber Barons By the late 1800’s and the early 1900’s it became clear to most Americans that this ‘Big Business’ thing had gotten out of hand that American citizens were suffering from the activities of these big businessmen who came to be called Robber Barons.

The American People and their representatives in government realized that a lot of Big Business practices were reducing the amount of competition between businesses. Between 1890 and 1914 a number of changes were made in America and the American Government began to regulate and set rules for Businesses to Follow. This was a part of the Progressive Era

Business Competition is beneficial to people and to a nation’s Economy The Consumer benefits from Competition. With competition. . . Businesses compete with one another to make better and better products and to improve the services they perform.

In the Communist systems the government owned all businesses and their was no competition. Capitalism produced – during the Cold War – much superior products. Communist East German Car Capitalist West German Car

Sherman Anti-Trust Act In 1890, the U. S. Congress passed a the famous Sherman Anti-Trust Act. The law said that practices by businesses that restrict competition. . . Are illegal. Monopoly: Exclusive control by one group of the means of producing or selling a commodity or service. If only one company is selling a particular product, then there is no competition and the company can set whatever price they choose. TRUST: An agreement between two or more companies to keep prices high, is an example. Which is called Price Fixing

Sherman Anti-Trust Act Sherman Antitrust Act: : From Wikipedia The Sherman Antitrust Act was the first United States government action to limit monopolies, and is the oldest of all U. S. antitrust laws. The Sherman Act provides: "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". T he Act also provides: "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 [. . . ] "The Act put responsibility upon government attorneys and district courts to pursue and investigate trusts, companies and organizations suspected of violating the Act. The Act was signed by President Benjamin Harrison in 1890 and was named for its author, Senator John Sherman, an Ohio Republican. After passing in the Senate on April 8 th, 1890 by a vote of 51 -1, the legislation passed unanimously (242 -0) in the House of Representatives on June 20 th, 1890. The Act was not used in court cases for some years, but Theodore Roosevelt used the Act extensively in his antitrust campaign, managing to divide the Northern Securities Company. It was further used by President William Howard Taft to split and divide the American Tobacco Company. The Act was intended to prevent arrangements designed to, or which tend to, increase the cost of goods to the consumer. Principal mission: 1. Consumer protection 2. Prevention of anticompetitive business practices such as

Anti-Trust in Action Standard Oil Bust Up In 1911, the federal government took action – using the Sherman Anti. Trust Act - against the Standard Oil Company which had been founded by John D. Rockefeller. The government said that since the company controlled about 90% of the oil business, there was no real competition in that industry. The government, through a court case was able to force the larger company te be broken up into a number of smaller companies. These smaller companies would then have to compete against one another.

The Federal Trade Commission (FTC) is an independent agency established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of "consumer protection" and the elimination and prevention of what regulators perceive to be harmfully "anti-competitive" business practices, such as coercive monopoly. The Federal Trade Commission Act was one of the major acts against trusts. Trusts and trust-busting were significant political concerns during the Progressive Era.

Price - Fixing Today, If two companies were to even talk about how they price their product or services to the public. . . They could be charged with very serious crimes. People have gone to prison for conspiring to fix prices. The U. S. government takes the preservation of a competitive business environment very, very importantly.

FTC and Merger Regulation If two companies want to merge and become one larger company. . . Often, they will have to get permission from the Federal Trade Commission – which will want to investigate to see if the merger will lessen competition.

Federal Trade Commission Bureau of Consumer Protection’s In recent times, the FTC has gotten itself involved also in Consumer Protection In the area of deceptive advertising and product ; ; ; The Bureau of Consumer Protection’s mandate is to protect consumers against unfair or deceptive acts or practices in commerce.