Sherman Antitrust Act

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Sherman Antitrust Act of 1890 is a federal statute which prohibits activities that restrict interstate commerce and competition in the marketplace. It outlaws any contract, conspiracy, or combination of business interests in restraint of foreign or interstate trade.

The Sherman Act is codified in 15 U.S.C. §§ 1-38, and was amended by the Clayton Act in 1914. 

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 prohibits monopolization or attempts at monopolizing any aspect of interstate trade or commerce and makes the act a felony.

The penalties for violating the Sherman Act can be severe. Although most enforcement actions are civil, individuals and businesses that violate it may be prosecuted by the Department of Justice (DOJ). Criminal prosecutions are typically limited to intentional and clear violations (such as when competitors fix prices or rig bids). 

In insurance law, the McCarran-Ferguson Act of 1945 (15 U.S.C. §§ 1011-1015) allows the Sherman Act to extend 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 more information about the Sherman Act, and the antitrust laws, refer here.

[Last updated in June of 2022 by the Wex Definitions Team]