Antitrust
Congress passed the Sherman Act in 1890 to prevent businesses from becoming so powerful that they could control important markets.
Because this statute was aimed at the Standard Oil Trust which then controlled the oil industry, it was termed antitrust legislation.
Per se: An automatic breach of antitrust laws.
Rule of reason: An action that breaches antitrust laws only if it has an anti-competitive impact.
The Sherman Act
Price-Fixing
Section 1 of the Sherman Act prohibits agreements that unreasonably restrain trade. The most common violation of this provision (and one of the most serious) involves horizontal price-fixing. When competitors agree on the prices at which they will buy or sell products, their price-fixing is a per se violation of §1 of the Sherman Act.
See the example in the test about Apple’s plans to introduce its first iPad for e-books, but its fear that it could not compete with Amazon’s price of $9.99 per book (at which price, Amazon was sometimes losing money.)
Resale Price Maintenance
Resale price maintenance is also called vertical price-fixing.
Resale price maintenance (RPM): A manufacturer sets minimum prices that retailers may charge.
Monopolization
Under §2 of the Sherman Act, it is illegal to monopolize or attempt to monopolize a market. To determine if a defendant has illegally monopolized, we must ask two questions:
1. Does the company control the market?
2. How did the company acquire or maintain its control