Sherman Antitrust Act

The Sherman Antitrust Act was signed into law by President Benjamin Harrison on July 2, 1890, and is named for its principal sponsor, Senator John Sherman of Ohio. It is the foundational statute of U.S. competition (antitrust) law and remains in force, codified at 15 U.S.C. §§ 1–7.

The Act has two core operative provisions:

• Section 1 prohibits "every 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." Courts have interpreted this to reach agreements such as price-fixing, bid-rigging, and market-allocation cartels.
• Section 2 prohibits monopolization, attempts to monopolize, and conspiracies to monopolize any part of interstate or foreign commerce.

Because Section 1's literal text would bar virtually any commercial contract, the Supreme Court in Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911), adopted the "rule of reason", under which only unreasonable restraints are unlawful. Certain conduct, such as horizontal price-fixing, is treated as per se illegal without inquiry into effects.

Enforcement is shared by the U.S. Department of Justice Antitrust Division (which can bring civil and criminal cases) and, for civil matters, the Federal Trade Commission under overlapping authorities created by the Clayton Act and FTC Act of 1914. Private plaintiffs may sue for treble damages plus attorneys' fees.

Landmark applications include the 1911 break-up of Standard Oil and American Tobacco, United States v. AT&T (consent decree, 1982) leading to the divestiture of the Bell System, and United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001). The Act applies extraterritorially to foreign conduct having a "direct, substantial, and reasonably foreseeable effect" on U.S. commerce, as clarified by the Foreign Trade Antitrust Improvements Act of 1982 and Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993).