Home Anti Trust Law What is Section 2 of the Sherman Antitrust Act

What is Section 2 of the Sherman Antitrust Act

Introduction

The Sherman Antitrust Act is a landmark piece of legislation that was enacted in 1890 to prevent the formation of monopolies and protect the competitive marketplace. One of the most critical provisions of the Sherman Antitrust Act is Section 2, which prohibits monopolies and attempts to monopolize. In this article, we will explore Section 2 of the Sherman Antitrust Act and its importance in protecting competition.

What Is Section 2 of the Sherman Antitrust Act?

Section 2 of the Sherman Antitrust Act prohibits monopolies and attempts to monopolize trade or commerce. The section makes it illegal for any company or person to monopolize, attempt to monopolize, or conspire with others to monopolize any part of interstate or foreign commerce.

What Constitutes a Monopoly?

Under Section 2 of the Sherman Antitrust Act, a company has a monopoly when it controls a significant portion of a particular market. The courts typically look at a company’s market share, pricing power, barriers to entry, and ability to exclude competitors to determine whether it has a monopoly.

What Constitutes an Attempt to Monopolize?

An attempt to monopolize occurs when a company engages in anticompetitive practices to try to gain a dominant position in the market. For example, a company might engage in predatory pricing, which involves setting prices so low that it drives competitors out of the market.

How Is Section 2 of the Sherman Antitrust Act Enforced?

The Department of Justice is responsible for enforcing Section 2 of the Sherman Antitrust Act. If the DOJ believes that a company has violated Section 2, it can file an antitrust lawsuit to seek an injunction to stop the anticompetitive behavior and prevent the company from establishing a monopoly.

Why Is Section 2 of the Sherman Antitrust Act Important?

Section 2 of the Sherman Antitrust Act is important because it protects competition and prevents the formation of monopolies. A competitive marketplace leads to lower prices, increased innovation, and higher-quality products and services. Without Section 2, companies could engage in anticompetitive practices to eliminate competitors and establish a monopoly, which would be harmful to consumers and the economy as a whole.

Conclusion

Section 2 of the Sherman Antitrust Act is a critical provision that protects competition and prevents the formation of monopolies. It prohibits companies from engaging in anticompetitive practices to gain a dominant position in the market. By enforcing Section 2, the Department of Justice can keep markets open and fair, which is essential for innovation, economic growth, and consumer protection.


The Sherman Antitrust Act is broken into two main legislative sections, each with the intended goal to control the restraint found in business practices concerning interstate commerce or foreign trade and commerce. In Section 1, companies are outlined as the chief offenders by their practices of trying to restrain interstate trade through negotiations, oral or written, or to conspire in general between rival competitors to achieve a level of market control. Section 2 outlines individuals that seek to monopolize the market for their own benefit. This may also extend to a group of individuals as well.

A monopoly is an economic term used to define complete and utter control within a sector of the economy. The market share is dominated by one person or a set of people that benefit the most, and is inherently devoid of competition. Since the Sherman Antitrust Act aims to promote competition, monopolies are therefore illegal in many ways.

However, for a monopoly to be considered to breach antitrust laws found within the Sherman Act a set of criteria need to be met. First, the individual must be in control of a monopoly and not a perceived monopoly. While a company’s product may appear frequently in the media and every store shelf, that does not necessarily confer the status of a monopoly. The individual or individuals need to be in control of a sole products or products within their business sector.

The next stepping stone to breaking the antitrust laws found within Section 2 of the Sherman Act directly concerns intent. If it is the intent of an individual to gain monopolistic control and then unleash the forces of their monopolistic control on the market, erasing many levels of competition within their business sector, then this would be considered a breach of the Sherman Act.

Yet, some individuals are fortunate enough to come in control of a monopoly by happenstance. A monopoly can develop from the sale of a superior product with respect to the company’s competitors. If this is the case the individual never had a monopolistic intent, but rather an intent to simply create a superior product, and this would not necessarily violate the Sherman Act.

Sometimes there are historical factors at play as well. Ford Motor Company at the turn of the 20th century had a monopoly on the automobile market. Although this was not the original design, Henry Ford developed new technology by creating the assembly line allowing him to mass produce the automobile, in turn giving him a monopoly. However, he never sought to directly squash competitors that would later use his ingenious design leading the way for competition to return in the market. Historical factors combined with technology were at play in this example, and therefore, did not violate the second section of the Sherman Act.

As with many aspects within the field of law, intent is very important. Intent with regards to the second section of the Sherman Antitrust Act is especially important since it has to be there for an activity to be deemed illegal. If not present, the monopolistic nature of a company needs to be examined in much greater depth, and at times, may not be viewed in breach of the Sherman Act.