Sherman Antitrust Act

Impact

Although it was passed in 1890, the Sherman Antitrust Act was not seriously enforced until 1901. Ironically, the only successfully prosecution of the Sherman Antitrust Act during the nineteenth century was not against big business but against labor unions during the Pullman strike of 1894. The government argued that by striking, the railroad workers were placing a restraint on trade and commerce, resulting in a direct violation of the Sherman Antitrust Act.

Then, just a year later, in United States v. E. C. Knight Co., which is known as the Sugar Trust Case, the Supreme Court essentially weakened the Sherman Antitrust Act by ruling that the American Sugar Refining Company was not in violation of the Sherman Antitrust Act. Even though the companyheld 98 percent of the sugar-refining industry in the United States, the Supreme Court ruled that manufacturing, such as refining, was a local activity and therefore was not subject to the interstate commerce regulations of the Sherman Antitrust Act. This ruling ultimately meant that any legal action against manufacturing had to take place at the state level rather than at the federal level.

The Sherman Antitrust Act was finally used against big business during the administrations of President Theodore Roosevelt (1901–1909) and President William Howard Taft (1909–1913). Between the two presidents, 135 cases were won against big business, including Northern Securities Company, Standard Oil, U.S. Steel, and American Tobacco. By the end of Taft's term inoffice, big business was severely weakened. In 1914 the Clayton Antitrust Act was passed with the hope of remedying weaknesses in the Sherman Antitrust Act. For instance, the Clayton Antitrust Act prohibits using antitrust legislation against unions.

Today antitrust legislation remains controversial. More recently, both Microsoft and Walt Disney have been sued under the Sherman Antitrust Act. For example, in 1999 the courts decided that Microsoft's hold on computer operating systems did constitute a monopoly. In particular, the bundling of Microsoft's Web browser, Internet Explorer, with the operating system restricted the market for other Web browsers. Microsoft was ordered to break into two units, one that produces the operating system and another that produces everything else. Microsoft appealed the case.