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The purpose of the Sherman Antitrust Act was to destroy monopolies that were using their power to harm society.
In the late 1800s, the US economy had come to be dominated by huge companies that controlled the vast majority of certain markets. People felt that the companies were using their monopoly power to hurt society. The companies did so by forcing people to pay excessively high prices for the goods or services they provided. Because of this, there was pressure on the government to break up monopolies, which is what the purpose of the Sherman Act was.
In the late 1800s, there was a big growth in the number of big businesses in the United States. By using various techniques, consumers saw their choices of competitors shrinking by 1890. Businesses began to reduce competition by merging competing companies in a process known as horizontal integration. In some industries, monopolies existed through a process called vertical integration where one company controlled every aspect of an industry. Reducing competition is good for business owners, but it usually isn’t good for consumers.
As more and more business mergers occurred, the government passed the Sherman Antitrust Act in 1890. This law was designed to make it much more difficult for business mergers to occur and for monopolies to form. However, it was so poorly written, the courts wouldn’t enforce the law, in part, because the courts weren’t sure what the law was actually saying or requiring. As a result, this law was very ineffective. Many business mergers occurred after this law was passed despite its intent to prevent these mergers from occurring.
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