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{{short description|1890 U.S. anti-monopoly law}}
{{Use American English|date=July 2022}}
{{Use mdy dates|date=July 2022}}
{{Infobox U.S. legislation
| shorttitle = Sherman Antitrust Act
| othershorttitles =
| longtitle = An Act to
| colloquialacronym =
| nickname =
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| effective date =
| public law url =
| cite public law = {{uspl|51|647}}<!--{{uspl}} can be used-->
| cite statutes at large = {{usstat|26|209}}
| acts amended =
| acts repealed =
| title amended =
| sections created =
| sections amended =
| leghisturl =
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| committees =
| passedbody1 = Senate
| passeddate1 = April 8, 1890
| passedvote1 = 52–1
| passedbody2 = House
| passedas2 = <!-- used if the second body changes the name of the legislation -->
| passeddate2 = June 20, 1890
| passedvote2 = unanimous vote
| conferencedate =
| passedbody3 =
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| signeddate = July 2, 1890
| amendments =
| SCOTUS cases = {{Collapsible list|framestyle=line-height:1em|''[[United States v. E.C. Knight Co.]]'', {{ussc|156|1|1894}}|''[[United States v. Trans-Missouri Freight Association]]'', {{ussc|166|290|1897}}|''[[Northern Securities Co. v. United States]]'', {{ussc|193|197|1904}}|''[[Hale v. Henkel]]'', {{ussc|201|43|1906}}|''[[Dr. Miles Medical Co. v. John D. Park & Sons Co.]]'', {{ussc|220|373|1911}}|''[[Standard Oil Co. of New Jersey v. United States]]'', {{ussc|221|1|1911}}|''[[United States v. American Tobacco Co.]]'', {{ussc|221|106|1911}}|''[[Federal Baseball Club v. National League]]'', {{ussc|259|200|1922}}|''[[Apex Hosiery Co. v. Leader]]'', {{ussc|310|469|1940}}|''[[United States v. Paramount Pictures, Inc.]]'', {{ussc|334|131|1948}}|''[[United States v. National City Lines]]'', {{ussc|334|573|1948}}|''[[Kiefer-Stewart Co. v. Seagram & Sons, Inc.]]'', {{ussc|340|211|1951}}|''[[Lorain Journal Co. v. United States]]'', {{ussc|342|143|1951}}|''[[Continental Television, Inc. v. GTE Sylvania, Inc.]]'', {{ussc|433|36|1977}}|''[[Arizona v. Maricopa County Medical Society]]'', {{ussc|457|332|1982}}|''[[Jefferson Parish Hospital District No. 2 v. Hyde]]'', {{ussc|466|2|1984}}|''[[Copperweld Corp. v. Independence Tube Corp.]]'', {{ussc|467|752|1984}}|''[[Spectrum Sports, Inc. v. McQuillan]]'', {{ussc|506|447|1993}}|''[[Leegin Creative Leather Products, Inc. v. PSKS, Inc.]]'', {{ussc|551|877|2007}}|''[[Pacific Bell Telephone Co. v. linkLine Communications, Inc.]]'', {{ussc|555|438|2009}}|''[[American Needle, Inc. v. National Football League]]'', {{ussc|560|183|2010}}|''[[North Carolina Bd. of Dental Examiners v. FTC]]'', {{ussc|574|494|2015}}|''[[Ohio v. American Express Co.]]'', {{ussc|docket=16-1454|volume=585|year=2018}}|''[[National Collegiate Athletic Assn. v. Alston]]'', {{ussc|docket=20-512|volume=594|year=2021}}}}
}}
[[File:John-Sherman-2.jpg|thumb|upright|[[United States Senate|Sen.]] [[John Sherman]] ([[Republican Party (United States)|R]]–[[List of United States Senators from Ohio|Ohio]]), the principal author of the Sherman Antitrust Act]]
{{Competition law}}
The '''Sherman Antitrust Act of 1890'''<ref>Officially re-designated as the "Sherman Act" by Congress in the [[Hart-Scott-Rodino Antitrust Improvements Act|Hart–Scott–Rodino Antitrust Improvements Act of 1976]], (Public Law 94-435, Title 3, Sec. 305(a), 90 Stat. 1383 at [[s:Page:United States Statutes at Large Volume 90 Part 1.djvu/1447|p. 1397]]).</ref> ({{USStat|26|209}}, {{usc|15|1|7}}) is a [[United States antitrust law]] which prescribes the rule of free competition among those engaged in commerce and consequently prohibits unfair [[Monopoly|monopolies]]. It was passed by [[United States Congress|Congress]] and is named for Senator [[John Sherman]], its principal author.
The Sherman Act broadly prohibits 1) anticompetitive agreements and 2) unilateral conduct that monopolizes or attempts to monopolize the relevant market. The Act authorizes the [[United States Department of Justice|Department of Justice]] to bring [[Lawsuit|suits]] to [[enjoin]] (i.e. prohibit) conduct violating the Act, and additionally authorizes private parties injured by conduct violating the Act to bring suits for [[treble damages]] (i.e. three times as much money in damages as the violation cost them). Over time, the federal courts have developed a body of law under the Sherman Act making certain types of anticompetitive conduct per se illegal, and subjecting other types of conduct to case-by-case analysis regarding whether the conduct unreasonably restrains trade.
The law attempts to prevent the artificial raising of prices by restriction of trade or supply.<ref>{{cite web|url=http://butnowyouknow.net/those-who-fail-to-learn-from-history/sherman-anti-trust-act-and-analysis/|title=Sherman AntiTrust Act, and Analysis|date=12 March 2011|url-status=live|archive-url=http://archive.wikiwix.com/cache/20111118040849/http://butnowyouknow.net/those-who-fail-to-learn-from-history/sherman-anti-trust-act-and-analysis/|archive-date=18 November 2011}}</ref> "Innocent monopoly", or
==Background==
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{{blockquote|... [a person] who merely by superior skill and intelligence...got the whole business because nobody could do it as well as he could was not a monopolist...(but was if) it involved something like the use of means which made it impossible for other persons to engage in fair competition."<ref>{{cite web|url=https://books.google.com/books?id=OsssAAAAYAAJ&pg=PA279|title=Bills and Debates in Congress Relating to Trusts: Fiftieth Congress to Fifty-seventh Congress, First Session, Inclusive|first1=United States|last1=Congress|first2=James Arthur|last2=Finch|date=26 March 2018|publisher=U.S. Government Printing Office|via=Google Books|url-status=live|archive-url=https://web.archive.org/web/20170409142100/https://books.google.com/books?id=OsssAAAAYAAJ&pg=PA279&lpg=PA279&source=bl&ots=QI5PFBZPn_&sig=0mccC_vXBFDUc9O8BsmPW2x6HAk&hl=en&ei=VoXFTs28OoObtwej1PWTCg&sa=X&oi=book_result&ct=result&resnum=3&ved=0CCgQ6AEwAg#v=onepage&f=false|archive-date=9 April 2017}}</ref>}}
At ''Apex Hosiery Co. v. Leader'' [http://supreme.justia.com/us/310/469/case.html 310 U.
{{blockquote|The legislative history of the Sherman Act, as well as the decisions of this Court interpreting it, show that it was not aimed at policing interstate transportation or movement of goods and property. The legislative history and the voluminous literature which was generated in the course of the enactment and during fifty years of litigation of the Sherman Act give no hint that such was its purpose.<ref>Footnote 11 appears here: "''See'' the Bibliography on Trusts (1913) prepared by the Library of Congress. ''Cf.'' Homan, Industrial Combination as Surveyed in Recent Literature, 44 Quart.J.Econ., 345 (1930). With few exceptions, the articles, scientific and popular, reflected the popular idea that the Act was aimed at the prevention of monopolistic practices and restraints upon trade injurious to purchasers and consumers of goods and services by preservation of business competition. ''See, e.g.,'' Seager and Gulick, Trust and Corporation Problems (1929), 367 ''et seq.,'' 42 Ann.Am.Acad., Industrial Competition and Combination (July 1912); P. L. Anderson, Combination v. Competition, 4 Edit.Rev. 500 (1911); Gilbert Holland Montague, Trust Regulation Today, 105 Atl.Monthly, 1 (1910); Federal Regulation of Industry, 32 Ann.Am.Acad. of Pol.Sci., No. 108 (1908), ''passim;'' Clark, Federal Trust Policy (1931), Ch. II, V; Homan, Trusts, 15 Ency.Soc.Sciences 111, 113:
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{{blockquote|Section 1:
:Every contract, combination in the form of [[Trust (19th century)|trust]] or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal.
Section 2:
: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
====Subsequent legislation expanding its scope====
{{unreferenced section|date=July 2022}}
The [[Clayton Antitrust Act]], passed in 1914, proscribes certain additional activities that had been discovered to fall outside the scope of the Sherman Antitrust Act. For example, as ''The Oxford Encyclopedia of American Business, Labor, and Economic History'' states, the Clayton Act added certain practices to the list of impermissible activities:<ref>{{Cite book |last=Mochoruk |first=James |title=The Oxford Encyclopedia of American Business, Labor, and Economic History |publisher=Oxford University Press |year=2013 |isbn=9780199738816 |editor-last=Dubofsky |editor-first=Melvyn |location=New York |chapter=Clayton Antitrust Act}}</ref>
* "price discrimination" between different purchasers, if such discrimination tends to create a monopoly
* "exclusive dealing" agreements
* " 'tying' " arrangements
* mergers and acquisitions that substantially reduce market competition.
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Notable cases filed under the act include:<ref>{{cite web|url=https://books.google.com/books?id=UcJAAAAAYAAJ|title=Sherman Anti-trust Law and List of Decisions Relating Thereto|first=United|last=States|date=26 March 2018|publisher=U.S. Government Printing Office|via=Google Books}}</ref>
* ''United States v. Workingmen's Amalgamated Council of New Orleans'' (1893), which was the first to hold that the law applied to labor unions
* ''Chesapeake & Ohio Fuel Co. v. United States'' (1902), in which the trust was dissolved<ref>{{cite web |url=http://repository.upenn.edu/cgi/viewcontent.cgi?article=1069&context=wharton_research_scholars |title=An Early Assessment of the Sherman Antitrust Act: Three Case Studies |access-date=2016-03-08 |url-status=live |archive-url=https://web.archive.org/web/20150926031609/http://repository.upenn.edu/cgi/viewcontent.cgi?article=1069&context=wharton_research_scholars |archive-date=2015-09-26 }}</ref>
* ''[[Northern Securities Co. v. United States]]'' (1904), which reached the Supreme Court, dissolved the company and set many precedents for interpretation.
* ''[[Hale v. Henkel]]'' (1906) also reached the Supreme Court. Precedent was set for the production of documents by an officer of a company, and the self-incrimination of the officer in his or her testimony to the [[grand jury]]. Hale was an officer of the [[American Tobacco Co.]]
* ''[[Standard Oil Co. of New Jersey v. United States]]'' (1911), which broke up the company based on geography, and contributed to the [[Panic of
* ''[[United States v. American Tobacco Co.]]'' (1911), which split the company into four.
* ''
* ''[https://www.govinfo.gov/content/pkg/USCOURTS-ca2-10-00846/pdf/USCOURTS-ca2-10-00846-0.pdf Fleischman vs Albany Medical Center]'' (2010), where nurses alleged Albany Medical Center suppressed their wages in violation of the Sherman Anti-Trust Act, by sharing wage information with other area hospitals. References: (1) Casetext Fleischman vs Albany Medical Center (2) Justia Docket No. 10-0846-mv
* ''[[United States v. Motion Picture Patents Co.]]'' (1915), which ruled that the company was abusing its monopolistic rights, and therefore, violated the Sherman act.
* ''[[Federal Baseball Club v. National League]]'' (1922) in which the Supreme Court ruled that [[Major League Baseball]] was not [[interstate commerce]] and was not subject to the antitrust law.
* ''United States v. National City Lines'' (1953), related to the [[General Motors streetcar conspiracy]].
* ''[[United States v. AT&T (1982)|United States v. AT&T Co.]]'', which was settled in 1982 and resulted in the breakup of the company.
*''[[Wilk v. American Medical Ass'n|Wilk v. American Medical Association]]'' (1990) Judge Getzendanner issued her opinion that the AMA had violated Section 1, but not 2, of the Sherman Act, and that it had engaged in an unlawful conspiracy in [[restraint of trade]] "to contain and eliminate the chiropractic profession."
* ''[[United States v. Microsoft Corp. (2001)|United States v. Microsoft Corp.]]'' was settled in 2001 without the breakup of the company.
* ''[[United States v. Google LLC (2020)|United States v. Google LLC]]'' (2020), wherein Judge Amit P. Mehta ruled Google acted illegally to maintain a monopoly in online search.
==Legal application==
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===Elements===
A Section 1 violation has three elements:<ref>
# an agreement;
# which unreasonably restrains competition; and
# which affects interstate commerce.
A Section 2 monopolization violation has two elements:<ref>{{ussc|name=United States v. Grinnell Corp.|link=|volume=384|page=563|pin=570–71|year=1966}}; see also {{cite court |litigants=Weiss v. York Hosp. |vol=745 |reporter=F.2d |opinion=786 |pinpoint=825 |court=3d Cir. |date=1984 |url=https://law.justia.com/cases/federal/appellate-courts/F2/745/786/128964/ |access-date=2019-02-02 }}</ref>
# the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. Section 2 also bans attempted monopolization, which has the following elements:
# qualifying exclusionary or anticompetitive acts designed to establish a monopoly
# specific intent to monopolize; and
# dangerous probability of success (actual monopolization).
===Violations "per se" and violations of the "rule of reason"===
Violations of the Sherman Act fall (loosely<ref>The truth is that our categories of analysis of anticompetitive effect are less fixed than terms like 'per se
* '''Violations "per se":''' These are violations that meet the strict characterization of Section 1 ("agreements, conspiracies or trusts in restraint of trade"). A per se violation requires no further inquiry into the practice's actual effect on the market or the intentions of those individuals who engaged in the practice. Conduct characterized as unlawful per se is that which has been found to have a {{"'}}pernicious effect on competition' or 'lack[s] ... any redeeming virtue{{'"}}<ref>{{ussc|name=Continental T.V., Inc. v. GTE Sylvania Inc.|link=|volume=433|page=36|pin=58|year=1977}} (quoting {{ussc|name=Northern Pac. Ry. v. United States|link=|volume=356|page=1|pin=5|year=1958}}).</ref> Such conduct "would always or almost always tend to restrict competition and decrease output".<ref>{{ussc|name=Broadcast Music, Inc. v. CBS|link=|volume=441|page=1|pin=19–20|year=1979}}.</ref> When a per se rule is applied (in contrast to a rule of reason analysis), a civil violation of the antitrust laws is found merely by proving that the conduct occurred and that it fell within a per se category.<ref>{{ussc|name=Jefferson Parish Hosp. Dist. No. 2 v. Hyde|link=Jefferson Parish Hospital District No. 2 v. Hyde|volume=466|page=2|pin=|year=1984}}; ''[[Gough v. Rossmoor Corp.]]'', [https://law.justia.com/cases/federal/appellate-courts/F2/585/381/424532/ 585 F.2d 381], 386–89 (9th Cir. 1978), cert. denied, {{ussc|440|936|1979|el=no}}; see {{ussc|name=White Motor v. United States|link=|volume=372|page=253|pin=259–60|year=1963}} (a per se rule forecloses analysis of the purpose or market effect of a restraint); ''Northern Pac. Ry.'', 356 U.S. at 5 (same).</ref> Conduct considered unlawful per se includes horizontal price-fixing,<ref>{{ussc|name=United States v. Trenton Potteries Co.|link=|volume=273|page=392|pin=397–98|year=1927}}.</ref> horizontal market division,<ref>''Continental T.V.'', 433 U.S. at 50 n. 16 (limiting {{ussc|name=United States v. Topco Assocs.|link=|volume=405|page=596|pin=608|year=1972}} by making vertical market division rule-of-reason analysis).</ref> and concerted refusals to deal.<ref>{{ussc|name=FTC v. Superior Court Trial Lawyers Ass'n|link=|volume=493|page=411|pin=|year=}} for collusive effects and {{ussc|name=NW Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co.|link=|volume=472|page=284|pin=|year=1985}} for exclusionary effects.</ref>
* '''Violations of the "rule of reason":''' A totality of the circumstances test, asking whether the challenged practice promotes or suppresses market competition. Unlike with per se violations, intent and motive are relevant when predicting future consequences. The rule of reason is said to be the "traditional framework of analysis" to determine whether Section 1 is violated.<ref>''Continental T.V.'', 433 U.S. at 49. The inquiry focuses on the restraint's effect on competition. {{ussc|name=National Soc'y of Professional Eng'rs v. United States|link=|volume=435|page=679|pin=691|year=1978}}.</ref> The court analyzes "facts peculiar to the business, the history of the restraining, and the reasons why it was imposed",<ref>''National Soc'y of Professional Eng'rs'', 435 U.S. at 692.</ref> to determine the effect on competition in the relevant product market.<ref>See ''Continental T.V.'', 433 U.S. at 45 (citing {{ussc|name=United States v. Arnold, Schwinn & Co.|link=|volume=388|page=365|pin=382|year=1967}}), and geographic market, see {{ussc|name=United States v. Columbia Steel Co.|volume=334|page=495|pin=519|year=1948}}.</ref> A restraint violates Section 1 if it unreasonably restrains trade.<ref>''Continental T.V.'', 433 U.S. at 49; see {{ussc|name=Standard Oil Co. v. United States|link=|volume=221|page=1|pin=58|year=1911}} (Congress only intended to prohibit agreements that were "unreasonably restrictive of competitive (conditions").</ref>
**'''Quick-look:''' A "quick look" analysis under the rule of reason may be used when "an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets", yet the violation is also not one considered unlawful per se.<ref>''Cal. Dental Ass'n'', 526 U.S. at 770.</ref> Taking a "quick look", economic harm is presumed from the questionable nature of the conduct, and the burden is shifted to the defendant to prove harmlessness or justification. The quick-look became a popular way of disposing of cases where the conduct was in a grey area between illegality "per se" and demonstrable harmfulness under the "rule of reason".
===Modern trends===
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===Monopoly===
Section 2 of the Act
===Application of the act outside pure commerce===
==Preemption by Section 1 of state statutes that restrain competition==
{{ibid|date=August 2024}}
To determine whether the Act '''preempts a state law''', courts will engage in a two-step analysis, as set forth by the Supreme Court in ''[[Rice v. Norman Williams Co.]]''
*First, they will inquire whether the state legislation "mandates or authorizes conduct that necessarily constitutes a violation of the antitrust laws in all cases, or ... places irresistible pressure on a private party to violate the antitrust laws in order to comply with the statute." ''[[Rice v. Norman Williams Co.]]'', 458 U.S. 654, 661; see also ''[[324 Liquor Corp. v. Duffy]]'', 479 U.S. 335 (1987) ("Our decisions reflect the principle that the federal antitrust laws pre-empt state laws authorizing or compelling private parties to engage in anticompetitive behavior.")
*Second, they will consider whether the state statute is saved from preemption by the [[state action immunity doctrine]] (aka Parker immunity). In ''[[California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc.]]'', 445 U.S. 97, 105 (1980), the Supreme Court established a two-part test for applying the doctrine: "First, the challenged restraint must be one clearly articulated and affirmatively expressed as state policy; second, the policy must be actively supervised by the State itself." Id. (citation and quotation marks omitted).
The antitrust laws allow coincident state regulation of competition.<ref>''See'' ''Exxon Corp. v. Governor of MD.'', 437 U.S. 117, 130–34 (1978) (state law with anticompetitive effect upheld to avoid destroying the ability of the states to regulate economic activity); ''Conant'', ''supra'' note 1, at 264., Werden & Balmer, ''supra'' note 1, at 59. ''See generally'' 1 P. Areeda & D. Turner, ''Antitrust Law'' P208 (1978) (discussing the interaction of state and federal antitrust laws); ''id.'' P210 (discussing areas where federal law expressly defers to state law).</ref> The Supreme Court enunciated the test for determining when a state statute is in irreconcilable conflict with Section 1 of the Sherman Act in [[Rice v. Norman Williams Co.]] Different standards apply depending on whether a statute is attacked on its face or for its effects.
A statute can be condemned on its face only when it mandates, authorizes or places irresistible pressure on private parties to engage in conduct constituting a per se violation of Section 1.<ref>''Rice,'' 458 U.S. at 661. If a statute does not require a per se violation, then it cannot be preempted on its face. ''Id.''</ref>
If the statute does not mandate conduct violating a per se rule, the conduct is analyzed under the rule of reason, which requires an examination of the conduct's actual effects on competition.<ref>''See'' ''Rice,'' 458 U.S. at 661.</ref> If unreasonable anticompetitive effects are created, the required conduct violates Section 1<ref>''National Soc'y of Professional Eng'rs v. United States'', 435 U.S. 679, 687–90 (1978); ''Continental T.V., Inc. v. GTE Sylvania Inc.'', 433 U.S. 36, 49 (1977)</ref> and the statute is in irreconcilable conflict with the Sherman Act.<ref>See ''Battipaglia v. New York State Liquor Auth.'', 745 F.2d 166, 175 (2d Cir. 1984) (while declining to decide whether a statute required an antitrust violation in a facial attack, the court left open the possibility of preemption based on the statute's operation), cert. denied, 105 S. Ct. 1393 (1985); ''Lanierland Distribs. v. Strickland'', 544 F. Supp. 747, 751 (N.D. Ga. 1982) (plaintiff failed to show anticompetitive effects sufficient to violate the rule of reason); ''Wine & Spirits Specialty, Inc. v. Daniel'', 666 S.W.2d 416, 419 (Mo.) ([[en banc]]) (declining to decide whether the rule of reason might invalidate a law on the record before them), Appeal dismissed, 105 S. Ct. 56 (1984); ''United States Brewers Ass'n v. Director of N.M. Dept' of Alcoholic Beverage Control'', 100 N.M. 216, 668 P.2d 1093, 1099 (1983) (rejecting a facial attack on a statute but reserving a decision on whether the actual application of the statute might violate the antitrust laws), appeal dismissed, 104 S. Ct. 1581 (1984). But see infra note 149{{clarify|reason=Wikipedia articles and their notes change constantly, you cannot just use note numbers. "Note 149" may be something totally different from when this was written. Was this passage cribbed from a journal article or court ruling?|date=August 2024}} for a discussion on the possibility of a much more limited rule of reason preemption analysis.</ref> Then statutory arrangement is analyzed to determine whether it qualifies as "state action" and is thereby saved from preemption.<ref>See ''Rice'', 458 U.S. at 662–63 n.9 ("because of our resolution of the pre-emption issue, it is not necessary for us to consider whether the statute may be saved from invalidation under the [state action] doctrine"); ''Capitol Tel. Co. v New York Tel. Co.'', 750 F.2d 1154, 1157, 1165 (2d Cir. 1984) (holding that the state action doctrine protected the conduct of a private party after assuming that it violated the federal antitrust laws), cert. denied, 105 S. Ct. 2325 (1985); ''Allied Artists Picture Corp. v. Rhodes'', 679 F.2d 656, 662 (6th Cir. 1982) (even if conduct violated Sherman Act, the statute is saved by the state action doctrine); '"Miller v. Hedlund'', 579 F. Supp. 116, 124 (D. Or. 1984) (statute violating Section 1 saved by state action); ''Flav-O-Rich, Inc. v. North Carolina Milk Comm'n'', 593 F. Supp. 13, 17–18 (E.D.N.C. 1983) (though conduct violates Section 1, state action saves statute).</ref>
''Rice'' sets out guidelines to aid in preemption analysis. Preemption should not occur "simply because in a hypothetical situation a private party's compliance with the statute might cause him to violate the antitrust laws".<ref>Rice v. Norman Williams Co., 458 U.S. 654, 659 (1982).</ref> This language suggests that preemption occurs only if economic analysis determines that the statutory requirements create "an unacceptable and unnecessary risk of anticompetitive effect",<ref>Id. at 668 (Stevens, J., concurring in the judgment).</ref> and does not occur simply because it is possible to use the statute in an anticompetitive manner.<ref>See ''Grendel's Den, Inc. v. Goodwin'', 662 F.2d 88, 100 n.15 (1st Cir.) (power to control others not sufficient for facial preemption where party had no institutional reason to make anticompetitive decisions especially likely), aff'd on other grounds, 662 F.2d 102 (1st Cir. 1981) ([[en banc]]), aff'd sub nom. ''Larkin v. Grendel's Den, Inc.'', 459 U.S. 116 (1982); ''Flav-O-Rich, Inc. v. North Carolina Milk Comm'n'', 593 F. Supp. 13, 15 (E.D.N.C. 1983) (in an oligopolistic market, price posting would result in an antitrust violation).</ref> It should not mean that preemption is impossible whenever both procompetitive and anticompetitive results are conceivable.<ref>But cf. ''Allied Artists Pictures Corp. v. Rhodes'', 496 F. Supp. 408, 449 (S.D. Ohio 1980) (indicating that a statute neither requiring nor permitting an anticompetitive collaboration gives the private party enough freedom of choice to preclude preemption), aff'd in part and remanded in part, 679 F.2d 656 (6th Cir. 1982)</ref> The per se rule "reflects the judgment that such cases are not sufficiently common or important to justify the time and expense necessary to identify them".
Another important, yet, in the context of ''Rice'', ambiguous guideline regarding preemption by Section 1 is the Court's statement that a "state statute is not preempted by the federal antitrust laws simply because the state scheme might have an anticompetitive effect".<ref>''Rice'', 458 U.S. at 659.</ref> The meaning of this statement is clarified by examining the three cases cited in ''Rice'' to support the statement.<ref>Id. (citing ''[[New Motor Vehicle Bd. v. Orrin W. Fox Co.]]'', 439 U.S. 96, 110–11 (1978); ''[[Exxon Corp. v. Governor of MD.]]'', 437 U.S. 117, 129–34 (1978); ''[[Joseph E. Seagram & Sons v. Hostetter]]'', 384 U.S. 35, 45–46 (1966)).</ref>
In ''[[New Motor Vehicle Board v. Orrin W. Fox Co.]]'', automobile manufacturers and retail franchisees contended that the Sherman Act preempted a statute requiring manufacturers to secure the permission of a state board before opening a new dealership if and only if a competing dealer protested. They argued that a conflict existed because the statute permitted "auto dealers to invoke state power for the purpose of restraining intrabrand competition".
In ''[[Exxon Corp. v. Governor of Maryland]]'', oil companies challenged a state statute requiring uniform statewide gasoline prices in situations where the [[Robinson-Patman Act]] would permit charging different prices. They reasoned that the Robinson-Patman Act is a qualification of our "more basic national policy favoring free competition" and that any state statute altering "the competitive balance that Congress struck between the Robinson-Patman and Sherman Acts" should be preempted.
In both ''New Motor Vehicle'' and ''Exxon'', the Court upheld the statutes and rejected the arguments presented as
{{quote|Merely another way of stating that the ... statute will have an anticompetitive effect. In this sense, there is a conflict between the statute and the central policy of the Sherman Act – 'our charter of economic liberty'. ... Nevertheless, this sort of conflict cannot itself constitute a sufficient reason for invalidating the ... statute. For if an adverse effect on competition were, in and of itself, enough to render a state statute invalid, the States' power to engage in economic regulation would be effectively destroyed.<ref>''New Motor Vehicle Bd. v. Orrin W. Fox Co.'', 439 U.S. 96, 110–11 (1978) (quoting ''Exxon Corp. v. Governor of MD.'', 437 U.S. 117, 133 (1978)).</ref>}}
This indicates that not every anticompetitive effect warrants preemption. In neither ''Exxon'' nor ''New Motor Vehicle'' did the created effect constitute an antitrust violation. The ''Rice'' guideline therefore indicates that only when the effect unreasonably restrains trade, and is therefore a violation, can preemption occur.
The third case cited to support the "anticompetitive effect" guideline is ''[[Joseph E. Seagram & Sons v. Hostetter]]'', in which the Court rejected a facial Sherman Act preemption challenge to a statute requiring that persons selling liquor to wholesalers affirm that the price charged was no higher than the lowest price at which sales were made anywhere in the United States during the previous month. Since the attack was a facial one, and the state law required no per se violations, no preemption could occur. The Court also rejected the possibility of preemption due to Sherman Act violations stemming from misuse of the statute. The Court stated that rather than imposing "irresistible economic pressure" on sellers to violate the Sherman Act, the statute "appears firmly anchored to the assumption that the Sherman Act will deter any attempts by the appellants to preserve their ... price level [in one state] by conspiring to raise the prices at which liquor is sold elsewhere in the country". Thus, ''Seagram'' indicates that when conduct required by a state statute combines with other conduct that, taken together, constitutes an illegal restraint of trade, liability may be imposed for the restraint without requiring preemption of the state statute.
''Rice v. Norman Williams Co.'' supports this misuse limitation on preemption. ''Rice'' states that while particular conduct or arrangements by private parties would be subject to per se or rule of reason analysis to determine liability, "[t]here is no basis ... for condemning the statute itself by force of the Sherman Act."<ref>''Rice v. Norman Williams Co.'', 458 U.S. 654, 662 (1982).</ref>
Thus, when a state requires conduct analyzed under the rule of reason, a court must carefully distinguish rule of reason analysis for preemption purposes from the analysis for liability purposes. To analyze whether preemption occurs, the court must determine whether the inevitable effects of a statutory restraint unreasonably restrain trade. If they do, preemption is warranted unless the statute passes the appropriate state action tests. But, when the statutory conduct combines with other practices in a larger conspiracy to restrain trade, or when the statute is used to violate the antitrust laws in a market in which such a use is not compelled by the state statute, the private party might be subjected to antitrust liability without preemption of the statute.{{cn|date=July 2022}}
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===Evidence from legislative history===
The Act was not intended to regulate existing state statutes regulating commerce within state borders. The House committee, in reporting the bill which was adopted without change, declared:
See also the statement on the floor of the House by Mr. Culberson, in charge of the bill,
And see the statement of Senator Edmunds, chairman of the Senate Judiciary Committee which reported out the bill in the form in which it passed, that in drafting that bill the committee thought that "we would frame a bill that should be clearly within our constitutional power, that we would make its definition out of terms that were well known to the law already, and would leave it to the courts in the first instance to say how far they could carry it or its particular definitions as applicable to each particular case as the occasion might arise."<ref>21 Cong.Rec. 3148</ref>
Similarly Senator Hoar, a member of that committee who with Senator Edmunds was in charge of the bill, stated
{{quote|Now we are dealing with an offense against interstate or international commerce, which the State cannot regulate by penal enactment, and we find the United States without any common law. The great thing that this bill does, except affording a remedy, is to extend the common-law principles, which protected fair competition in trade in old times in England, to international and interstate commerce in the United States.<ref>21 Cong.Rec. 3152.</ref>}}
== Criticism ==
{{See also|Competition law|United States antitrust law}}
[[Alan Greenspan]], in his essay entitled ''Antitrust'',<ref>{{cite web |url=http://www.polyconomics.com/ssu/ssu-980612.htm |title=Antitrust, by Alan Greenspan |access-date=2022-04-07 |url-status=live |archive-url=https://web.archive.org/web/20220217061126/http://www.polyconomics.com/ssu/ssu-980612.htm |archive-date=2022-02-17 }}</ref> described the Sherman Act as stifling innovation and harming society. "No one will ever know what new products, processes, machines, and cost-saving mergers failed to come into existence, killed by the Sherman Act before they were born. No one can ever compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has kept our standard of living lower than would otherwise have been possible." Greenspan summarized the nature of antitrust law as "a jumble of economic irrationality and ignorance".<ref>Criticisms such as this one, attributed to Greenspan, are not directed at the Sherman act in particular, but rather at the underlying policy of all antitrust law, which includes several pieces of legislation other than just the Sherman Act, e.g. the [[Clayton Antitrust Act]].</ref> Greenspan at that time was a disciple and friend of [[Ayn Rand]], and he first published ''Antitrust'' in Rand's monthly publication ''The Objectivist Newsletter.'' Rand, who described herself as "a radical for capitalism",<ref>"Check Your Premises", ''The Objectivist Newsletter'', January 1962, vol. 1, no. 1, p. 1</ref> opposed antitrust law not only on economic grounds but also morally, as a violation of property rights, asserting that the "meaning and purpose" of antitrust law is "the penalizing of ability for being ability, the penalizing of success for being success, and the sacrifice of productive genius to the demands of envious mediocrity".<ref>''Capitalism: The Unknown Ideal'', Ch. 3, New American Library, Signet, 1967</ref>
In 1890, Representative [[William E. Mason (American politician)|William E. Mason]] said "trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to people of this country by the trusts which have destroyed legitimate competition and driven honest men from legitimate business enterprise."<ref>Congressional Record, 51st Congress, 1st session, House, June 20, 1890, p. 4100.</ref> Consequently, if the primary goal of the act is to protect consumers, and consumers are protected by lower prices, the act may be harmful if it reduces [[economy of scale]], a price-lowering mechanism, by breaking up big businesses. Mason put small business survival, a justice interest, on a level concomitant with the pure economic rationale of consumer interest.{{citation needed|date=December 2020}}
Economist [[Thomas DiLorenzo]] notes that Senator Sherman sponsored the 1890 [[William McKinley]] tariff just three months after the Sherman Act, and agrees with ''[[The New York Times]]'' which wrote on October 1, 1890: "That so-called Anti-Trust law was passed to deceive the people and to clear the way for the enactment of this Pro-Trust law relating to the tariff." The ''New York Times'' went on to assert that Sherman merely supported this "humbug" of a law "in order that party organs might say ... 'Behold! We have attacked the trusts. The Republican Party is the enemy of all such rings.{{'"}}<ref name=NYT>{{cite news|url=https://timesmachine.nytimes.com/timesmachine/1890/10/01/103268337.pdf |archive-url=https://web.archive.org/web/20190524101419/https://timesmachine.nytimes.com/timesmachine/1890/10/01/103268337.pdf |archive-date=2019-05-24 |url-status=live|title=Mr. Sherman's Hopes and Fears|date=1890-10-01|access-date=2008-04-21|newspaper=[[The New York Times]]}}</ref> Dilorenzo writes: "Protectionists did not want prices paid by consumers to fall. But they also understood that to gain political support for high tariffs they would have to assure the public that industries would not combine to increase prices to politically prohibitive levels. Support for both an antitrust law and tariff hikes would maintain high prices while avoiding the more obvious bilking of consumers."<ref>DiLorenzo, Thomas, ''Cato Handbook for Congress'', Antitrust.</ref>{{fcn|reason=Which edition? What does the word "Antitrust" mean here?|date=August 2024}}
According to a 2018 study in the journal ''Public Choice'', "Senator John Sherman of Ohio was motivated to introduce an antitrust bill in late 1889 partly as a way of enacting revenge on his political rival, General and former Governor Russell Alger of Michigan, because Sherman believed that Alger personally had cost him the presidential nomination at the 1888 Republican national convention ... Sherman was able to pursue his revenge motive by combining it with the broader Republican goals of preserving high tariffs and attacking the trusts."<ref>{{Cite journal |last=Newman |first=Patrick |date=2018-01-12 |title=Revenge: John Sherman, Russell Alger and the origins of the Sherman Act |journal=Public Choice |volume=174 |issue=3–4 |language=en |pages=257–275 |doi=10.1007/s11127-017-0497-x |s2cid=158141317 |issn=0048-5829}}</ref>
==See also==
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==External links==
{{Wikisource|Sherman Act|Sherman Anti-Trust Act}}
* [https://www.govinfo.gov/content/pkg/COMPS-3055/uslm/COMPS-3055.xml Sherman Act] as amended ([https://www.govinfo.gov/content/pkg/COMPS-3055/pdf/COMPS-3055.pdf PDF]/[https://www.govinfo.gov/app/details/COMPS-3055/ details]) in the [[United States Government Publishing Office|GPO]] [https://www.govinfo.gov/help/comps Statute Compilations collection]
; Official websites
* [http://www.usdoj.gov/atr/ U.S. Department of Justice: Antitrust Division]
* [https://www.justice.gov/atr/file/761131/download U.S. Department of Justice: Antitrust Division – text of
;Additional information
* Antitrust Division's [http://www.usdoj.gov/atr/public/guidelines/lencorp.htm "Corporate Leniency Policy"]
* [http://www.polyconomics.com/index.php?option=com_content&view=article&id=1605:antitrust-by-alan-greenspan&catid=47:1998&Itemid=31 ''Antitrust''] {{Webarchive|url=https://web.archive.org/web/20140511002404/http://www.polyconomics.com/index.php?option=com_content&view=article&id=1605:antitrust-by-alan-greenspan&catid=47:1998&Itemid=31 |date=May 11, 2014 }} by [[Alan Greenspan]]
* "Labor and the Sherman Act" (1940). ''[[Yale Law Journal]]'' 49(3) p. 518. {{
* Dr. Edward W. Younkins (February 19, 2000). [http://www.quebecoislibre.org/000219-13.htm "Antitrust Laws Should Be Abolished"].
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