Sherman Antitrust Act

Definition

A federal anti-monopoly and anti-trust statute, passed in 1890 as 15 U.S.C. §§ 1-7 and amended by the Clayton Act in 1914 (15 U.S.C. § 12-27), which prohibits activities that restrict interstate commerce and competition in the marketplace.

Overview

Broad and sweeping in scope, § 1 of the Act states that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” § 2 of the Act further prohibits monopolization or attempts at monopolizing any aspect of interstate trade or commerce and makes the act a felony. Federal district courts have the jurisdiction to enjoin violations of the Sherman Act, and these proceedings are instituted by United States Attorneys in their respective districts. The injured party (whether it is the federal government, an individual state, or a private party) is entitled to three times the amount of injury that it has suffered; this award is known as treble damages. The Act does not apply to trade or commerce with foreign nations unless there was conduct that has a “direct, substantial, and reasonably foreseeable effect” and that effect gives rise to a claim under the Act. For a full text of the Sherman Antitrust Act, see:

http://www.law.cornell.edu/uscode/15/usc_sup_01_15_10_1.html

In insurance law, the McCarran-Ferguson Act of 1945, 15 U.S.C. §§ 1011-15 vested regulatory authority of the insurance industry on the states; thus, the federal reach of the Sherman Act, the Clayton Act, and the Federal Trade Commission Act is applicable to the “business of insurance” only to the extent where: (1) such business is not regulated by state law [§ 1012], or (2) there are insurer or acts of, “boycott, coercion, or intimidation” [§ 1013]. For the full text of the McCarran-Ferguson Act, see:

http://www.law.cornell.edu/uscode/html/uscode15/usc_sup_01_15_10_20.html