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February 17, 2012
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The Antitrust Law of United States: the Sherman Act against the Monopoly

Antitrust legislation is the set of laws that are designed to promote competition in the market by proscribing the existing monopolies. Prolonged monopolies in the market get strengthened by the time.

It becomes

difficult for the new monopolies to make their pace in the market. It limits the competition in the economy and thus reduces the real output of the economy. It is the responsibility of the government of the country to make such regulations that make the entrance of new business easy to enter into the market.

These rules are meant to promote the optimal prospects for the new monopolies by breaking down the abusive monopolies. The Sherman Act 1980 is a milestone in this regard. The act was presented on 2 July 1980 passed by the congress. It is the federal statue on competition law.

It was presented to prohibit the certain business activities that where causing a barrier for new monopolies in entering into the market. Obstructions for new monopolies cause reduction in the competition. Therefore it was felt to frame such laws that may reduce the influence of the existing monopolies and provide easy pace to the new ones in order to boost the competition in the marketplace.

The act was supposed to investigate and pursue the trusts, organizations, monopolies that where suspected of being involved in violation. It was the very first Act passed by the US federal government to check the monopolies and cartels. The grounds of the act were the concentration of power in big corporations and in the amalgamation of few big concerns.

Combination of business concerns refers to the trusts (transferring of shares of stockholders of different companies to a specific set of trustees). In exchange the stockholder receives the consolidated share in the earnings of the joint ventures. Opposition to the trust was immensely by the side of the farmers who were charged by high rates of transporting their products to cities.

The Sherman Act authorized the US government to dissolve the trusts, make the new entries into the marketplace. It was clearly mentioned in the act that if any corporation or business signed any contract or agreement in the form of trust or some other conspiracy it will be punished by the federal government.

The penalties were attributed to fine of $10,000,000 in case of a corporation and in case of a person it was $350,000 or imprisonment of three years. In severe cases it was decided that the penalty could be the both fine and imprisonment. The act was enacted to ensure the securities of new firms and is still in practice in USA.

For other information about Economics and Antitrust ..

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