Legal Definitions - Sherman Antitrust Act

The Sherman Antitrust Act of 1890 is a federal law that prohibits activities that limit competition in the marketplace and restrict interstate commerce. It makes it illegal for businesses to engage in any contract, conspiracy, or combination that restrains foreign or interstate trade.

For example, if two companies agree to fix prices for a certain product, they would be violating the Sherman Act. This is because they are conspiring to limit competition and artificially inflate prices, which harms consumers.

The Sherman Act also prohibits monopolization or attempts to monopolize any aspect of interstate trade or commerce. This means that a company cannot use its dominant position in the market to exclude competitors or control prices.

For instance, if a company has a monopoly on a certain product and uses its power to drive out competitors, it would be violating the Sherman Act. This is because it is engaging in anti-competitive behavior that harms consumers and limits choice in the marketplace.

The penalties for violating the Sherman Act can be severe, including fines and even criminal prosecution in some cases. The law is enforced by the Department of Justice, which investigates and prosecutes violations of the Act.