Small Business & Antitrust Laws
Andrew Paul Danecki
DeVry University

Small Business & Antitrust Laws

It may seem like in the United States that the free-market is a bit cutthroat and everyone is out for their own best interests. The U.S. is best described to have a mostly capitalist economy, and there are a handful of laws to allow growing businesses to have a fair chance to compete against other companies of the similar market. Antitrust laws, protection against monopoly, and laws pertaining to certain mergers are just to name a few. These laws are important, and extremely effective at protecting the small and growing businesses. It was not perfect at first, of course, but has adapted to cover a handful of loopholes.
When you think of a monopoly, what normally comes to mind? That good, old classic board game made by Hasbro. That’s what I think of when that word comes in mind. And just like in the game, you try to dominate the board and be the only player left. The same goes for that word in the market world, which actually is illegal since the Sherman Antitrust Law was enacted in 1890. A monopoly is when a single company has solid control over the market with a particular product or service. Congress passed this first antitrust law as a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade” (The Antitrust Laws, n.d.). The last two laws were passed shortly later, and all three of these laws still remain the core federal antitrust laws that are still in effect today. But we will get to those two later.
John Sherman helped author the Sherman Antitrust Act after his nomination to President Hayes’ Cabinet as Secretary of the Treasury (Biographies of the Secretaries of State: John Sherman, n.d.). He had a strong influence in democracy, but his outspokenness put him in the spotlight as tension rose between him and President McKinley. The president at the time would do what he could to limit his voice, such as allowing his subordinates to negotiate foreign policy. And at times Assistant Secretary Day would replace Sherman at Cabinet meetings.
The birth of this first antitrust act was largely due to the numerous corporations that concentrated a lot on economic power decades following the Civil War. Several states had enacted similar laws in an attempt to control this, but were limited to intrastate commerce. Congress was able to utilize its constitutional power to regulate the commerce outside of the intrastate structure. However, with the wording of the act, companies were able to find their way around this “law” and claim that they were not intentionally monopolizing and were able to avoid any penalties or fines. One such example that sparked a dismantling of the law was the United States v. E. C. Knight (1895) (McBride, 2006). This case involved the American Sugar Refining Company in which shortly after the Sherman Antitrust Act was passed, bought out four other sugar refineries. In doing this, the American Sugar Refining Company had increased its control of sugar production to 98%, across the whole nation. However, the court stated in short that Congress had the power to control trade and not manufacturing, therefore leaving the American Sugar Refining Company manufacturing operations as a legal act.
After the trial with E. C. Knight, Congress had passed a couple more laws that provided additional support to the original Sherman Antitrust Act. These new laws were the Federal Trade Commission Act and the Clayton Act, both passed in 1914. The Federal Trade Commission Act, which also later established the Federal Trade Commission (FTC), was made to specifically monitor unfair business practices and help monitor any violations of the antitrust laws. Several years ago, the FTC released information on its proposed guides for products that had “Made in the U.S.A.” labels. An example, as stated from the Federal Trade Commission website, would be that it’s not a deceptive practice if the manufacturing costs constituted at least 75% in the United States. A good handful of these laws help protect merchandise from branding the label of American Made if it doesn’t meet these certain criteria.
The Clayton Act had been passed more specifically to back up the original Sherman Antitrust Act, since there had been loopholes and ways businesses could work around the law. Unlike the Sherman Antitrust Act, the Clayton Act prohibits the merger or acquisition where it may lead to a monopoly. With the Clayton Act, the American Sugar Refining Company would be at fault since it had controlled 98% of the national sugar production after it had acquired four other sugar companies.
It wasn’t perfect at first, but you can see how these laws that were passed can help the initial growth of a new business. We are a country where the market is open and free, and we thrive on competition. Though it’s not necessarily an “every man for himself” kind of fight, these laws help to prevent it from going in that direction. People that have high ambitions, dreams, and ideas are able to pursue them and attempt to make something of themselves. These laws are to protect them from the larger corporations that have been around the block a lot longer, and have proven to be useful.

References
Samozain (2013). Laws to Promote Fair and Competitive Practices. Retrieved from http://business-basics.org/laws-to-promote-fair-and-competitive-practices/
Froning, D. (2000). The Benefits of Free Trade: A Guide For Policymakers. Retrieved from http://www.heritage.org/research/reports/2000/08/the-benefits-of-free-trade-a-guide-for-policymakers
Biographies of the Secretaries of State: John Sherman (n.d.). Retrieved from http://history.state.gov/departmenthistory/people/sherman-john McBride, A. (2006). United States v. E. C. Knight (1895). Retrieved from http://www.pbs.org/wnet/supremecourt/capitalism/landmark_knight.html
The Antitrust Laws (n.d.). Retrieved from http://www.ftc.gov/tips-advice/competition- guidance/guide-antitrust-laws/antitrust-laws Examples of Applications (1997). Retrieved from http://www.ftc.gov/news-events/press-
releases/1997/05/examples-applications-ftc-proposes-new-standard-made-usa-claims