Question

In: Economics

Please name and briefly discuss the most important provisions of: a. The Sherman Antitrust Act of...

  1. Please name and briefly discuss the most important provisions of: a. The Sherman Antitrust Act of 1890   b. The Clayton Act of 1914   c. The Federal Trade Commission Act of 1914 (and the 1938 Amendment) and d. The Robinson-Patman Act of 1936.
  2. What happened as a result of the 1906 Supreme Court ruling against the infamous Standard Oil Trust of New Jersey?
  3. Please name six industries or businesses that are EXEMPT from antitrust legislation. In your opinion, why is it that labor unions are exempt? Professional baseball? Public utilities, like PG&E? Shouldn’t PG&E be MORE heavily regulated? Why or why not? Are there sound public policy reasons for these exemptions, and if so, what are they? Or is it all just a matter of these industries and businesses wielding enough political power to obtain an exemption?
  4. What is the Supreme Court’s definition of the term “monopolization”?

Solutions

Expert Solution

a) The Sherman Antitrust Act of 1890:

There are two main provisions of this act, and had the main target of limiting anti-competitive behaviour like trusts, cartels and monopolies.   

i) The key provision in this act provides the federal government the authority to pursue trusts and dissolve the same by making it illegal for every contract, a combination of a form of trust and otherwise, a conspiracy i.e. in restraint of trade and commerce. Interferences with trade and economic competition are prohibited.

ii) The second provision states that individuals who indulge in monopolizing or even attempt to monopolize are to be held guilty of a felony. This legsilation was applicable to all states, US territories and District of Columbia.

b) The Clayton Act of 1914:

The anti-trust sentiments and deficiences that prevailed in the Sherman Antitrust Act were responded by the Clayton Act. The provisions of this act were made far more detailed and strengthened and included these main provisions:

i) Prohibition levied on anti-competitive price discrimination

ii) Prohibition against specific tying and dealing practices.

iii) An expanded power of the private parties to sue and achieve treble i.e. triple damages.

iv) Labour exemption which permits union organizing.

v) Anti-competitive mergers to be prohibited.

c) The Federal Trade Commission Act of 1914 is the main statute of the commision. After getting amended in 1938 the Commision is empowered to carry out the following privisions:

i) Prevent unfair practices of competition and deceptive acts in/impacting commerce.

ii) Seek monetary compensation and other relief for conducting injuries to consumers.

iii)Prescribing rules which define specific acts and practices which are unfair and deceptive, and establishing conditions tha prevent such practices.

iv) Gather and put together info and data in order to comduct investigations which are related to the organization, business, practices and managing entities involved in commerce.

v) Prepare reports and legislative recommendations subjected towards the Congress and the common public.

d) The Robinson-Patman Act of 1936 was passed as an amendment to the Clayton Act, in order to outlaw price discrimination. This act's main privision was to prohibit sellers of commodities from selling similar, comparable goods to different consumers at different prices, with the exception of certain circumstances. This act's provisions are applicable to both sellers who offer such discriminatory prices as well as buyers who recieve such prices with full knowledge. This act is also directed to cure second line injury,which is the injury to the competitors of buyers who is on the recieving side of this price, along with the primary line injury which implies the injury to competitors of a seller who are offering such discriminatory prices.

After the 1906 Supreme Court ruling against the Standard Oil Trust of New Jersey , where the court ruled in favour for United States. It held the Standard Oil Trust to be guilty of an illegal business combination , engaged in unreasonable restraint to trade. The US government ordered the Standard Oil Trust monopoly to be dissolved within 6 months, as a result of a lawsuit brought under the Sherman AntiTrust Act which allowed to break up any business that prohibited competition. After the ruling, it resulted in breakup of the Standard Oil into seperate smaller companies, all competiting with each other, thus effectively lowering the prices.

Certain sectors of the economody require a minimal number of large frms to thrive. There are certain industries in which the individuals would be worse off if the firms are subject to anti-trust laws. These are the exceptions or sectors that are exempt from anti-trust legislation:

i)The technology sector

ii) Sporting organizations like Major League Baseball, National Basketball Association, National Football League.

iii) Agricultural Cooperatives Sector

iv) Labour unions

v) Insurance Companies

vi) Public utilities like P&G.

As per rules, need to answer the first four subparts, a, b, c and d. Have answered some more parts. Thank you!


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