The Roots of Antitrust Policy in the United States' Sherman Act

Abstract

The origins of modern competition policies date back to the end of the 19th century in the United States of America, as a reaction to the growth of certain companies and their economic power, which was the result of economic development and the consequent increase in competition that shaped American society in the second half of the 19th century. Companies began to organise themselves into large groups, establishing coalition relationships with each other and becoming subject to the same control, which, because it was exercised through fiduciary contracts, justified the use of the term trust to designate these corporate structures. The legislation that came to control these groups of companies, resizing companies and preventing excesses, was therefore called antitrust. In the second half of the 19th century, a number of factors allowed an increase in the size of companies. The last part of the 19th century was characterized by low and unstable prices, overwhelmed by two serious economic crises (1873-79 and 1883-86) which led some economists to adopt the term Great Depression to designate this period in American history, in a parallel with the recession that hit Europe at the same time, which was not unrelated to the need for the economy to adjust to the conditions resulting from the American Civil War, including the decrease in savings. It is in this context that companies, in order to reduce price wars and market instability, began to organise themselves into trusts and cartels. Price stability was thus achieved at the expense of the end consumer and producers, including farmers and small industrialists and traders, who were subject to discriminatory and unfair practices and restrictive agreements that strengthened the monopolies of large companies, eliminating small business competitors and imposing unfavorable conditions on those who had to negotiate with them. This small business was at the origin of a public outcry that reached its zenith in the last decades of the century with the passing of various state antitrust laws and the Sherman Act. In this paper, we aim at demonstrating the origins of at US antitrust policy by examining the Sherman Act. Therefore, it is pertinent to begin to trace the evolution of antitrust policy in Common Law. As we will conclude the US antitrust policy has been ever since forged by economic ideology.