U.S. Antitrust Legislation
As technology and business's continue to grow at a indefinite pace, government regulation's always seem to have to play catch-up with these rapidly thriving industries. During the Late 19th and Early 20th centuries, big business' began to become a household name. Single large corporations began to dominate their respective industries, endangering the operation of a free market economy, and virtually eliminating their competition. Realizing that this was a problem that wouldn't go away, the government finally pulled alongside, creating laws and controls to eliminate the Monopolization of certain companies to their industries.
In 1890, the birth of the Sherman Antitrust Act, marked the first generation of antitrust legislation. Enacted to limit concentrations of power that interfere with trade and reduce economic competition. The Sherman Antitrust Act prohibited fixed prices, limits on industrial output, share markets, as well as attempts to monopolize any part of trade in the United States. And in enforcing the provisions, the Department of Justice, through litigation in federal courts, ordered firms to dissolve or break up by law if found guilty of illigal practices.
Following the first generation legislation came the Clayton Antitrust Act in 1914. Passed as a supplement to the Sherman Antitrust Act, this act prohibited exclusive sales contracts, local price-cutting, rebates, and inter-corporate stock holdings. And also created provisions for fair treatment of organized labor
Many “Big Business” corporations of this time, undoubtedly held monopolies of their industries. Most were declared illegal and ordered to breakup. Two such powerful monopolies were Standard Oil and American Tobacco, after receiving legal action both companies were ordered to breakup in order to restore competition to their respective industries.
Similar legal action also fell upon IBM, the colossal computer manufacturer that enjoyed 70% of the market share in the 1960’s and 1970’s. In January of 1969, the Government began an enormous antitrust investigation. Attempting to break the corporation many times into smaller companies that would compete against each other. After a 13-year long investigation, the government abandoned their effort in 1982. Over time the Computer world changed dramatically from once focusing on large mainframes to now, personal computers. The emergence of compatible computers to the IBM PC exemplifies the growth of competition within the industry thus altering the situation and outdating the governments allegations.
Although IBM won the case, it still took actions to avoid the appearance of a monopoly. Reluctant to lower prices, for fear that the government would call it “predatory pricing”, IBM fell on hard times and severe financial turmoil due to remaining Antitrust Fears. To this day in the middle of the pack when it comes to consumer market share of personal computers, it is probable that IBM may never be able to fully recover from the shadow of its Antitrust investigation. And it remains to be scene whether Microsoft will share a similar fate.