In today’s world of bipartisan politics and politicians voting strictly on party lines, it may seem nearly impossible to fathom that the Sherman Ant-Trust Act of 1890 passed the Senate by a vote of 51-1 and the House of Representatives unanimously voted in favor of it with a vote of 242-0. Less than three weeks after getting through the House, on July 2, 1890, President Benjamin Harrison signed it into law. Similar to what we see now, new industries were emerging at the time. The landscape and marketplace were moving from small individualized businesses to large corporations. The likes of Andrew Carnegie through the steel industry and John D. Rockefeller via Standard Oil began driving away their competition. The Sherman Anti-Trust Act declares monopolies illegal. In 1914, building upon the act, passed the Clayton Anti-Trust Act that defined business practices that are conducive to the formation of monopolies or that result from them as illegal. These laws aimed to prevent one company from controlling an entire industry. (The Sherman Ant-Trust Act Explained)
Like any type of government regulation, the Sherman Anti-Trust Act has both an upside and a downside. The advantage of eliminating monopolies is fostering competition within a market. By doing this, prices remain lower for the consumer, provide more choices, and increase wages for the workers. The negative of doing away with monopolies is that many times the company that has been able to take over an industry is extremely efficient. The product or service being provided has outlasted all others. Furthermore, doing away with a monopoly can cause disruption and chaos in an industry.
The Sherman Anti-Trust Act has affected society as a whole. For example, one should turn to the phone industry. Currently, when picking a phone carrier, consumers can choose from three major carriers, Verizon, T-Mobile, and AT&T. In 1974, AT&T controlled over 90% of the market. A lawsuit was brought against AT&T stating they were a monopoly. After eight years of legal battling, in January 1982, AT&T agreed to break up its local business into seven smaller regional operating companies known as “Baby Bells.” The divestiture process took two years. When it ended in 1984, AT&T retained only long-distance, Bell Labs, and Western Electric. The regional companies that resulted from the AT&T monopoly breakup went through a series of mergers and consolidations over the next 25 years (Grabel, 2022). When wireless emerged as a new and widely adopted technology, it caused an arms race as companies competed to expand areas of service. The results can be seen today in the handful of national powerhouses that offer a wide variety of telecommunications services, including landlines, wireless, cable, and fiber-optic internet and television. An example of a near-monopoly is the De Beers Group, the world's largest diamond mining, production, and retail company. For almost a century, De Beers monopolized the diamond industry. However, market and regulatory factors diminished its market share from approximately 85% in the late 1980s to around 23% in 2019 (Zimniskly, 2019).
The Sherman Anti-Trust Act affects different segments of society differently. For example, the Sherman Act and subsequent legislation ruled that labor unions were not subject to anti-trust laws because human beings are not seen as commodities. This helps the average worker in an attempt to help increase wages. Anti-trust legislation can have a negative effect on the ultra-rich. For example, a small group can control a large market. By breaking up or outlawing monopolies, there is a potential to limit the amount of money one company or investor could make. With the increase in competition, the cost of a product or service remains lower than if only one organization controlled the market. This helps the elderly and poor who may be on a fixed budget.
The Anti-Trust laws that grew out of the Sherman Anti-Trust Act affect society as a whole. For example, television cable operators with more than 300 subscribers and 12 channels had to set aside one-third of their channels for local commercial broadcast stations. In affirming the must-carry provisions, which require cable systems to carry local broadcast television stations, the Supreme Court ruled that these provisions furthered important government interests in promoting a diversity of opinions and ideas (Schultz). The Anti-Trust laws will affect my generation in the technology market. For example, Facebook is synonymous with the Internet, and as WhatsApp is with cell phones. Neither have been deemed monopolies, but they are under a microscope. Facebook makes its money through advertising and is free to consumers; its financial impact on users makes it difficult for regulatory bodies to apply standard monopoly measures (Vesoulis, 2021).
References
Grabel, S. (2022). This Month In Business History: The Breakup of The Bell System. History Factoryhttps://www.historyfactory.com/insights/this-month-in-business-history-bell-system/
Schultz, D. Media Exemption to Antitrust Laws. The First Amendment Encyclopedia. https://www.mtsu.edu/first-amendment/article/1128/media-exemption-to-antitrust-laws
Vesoulis, A. (2021) Facebook’s Horrible, No Good Very Bad Week_ And What It Means for Antitrust Reform. Time. https://time.com/6105166/facebook-monopoly-antitrust-reform/
Zimniskly, P. (2019). A Brief History of De Beers. https://www.paulzimnisky.com/a-brief-history-of-de-beers
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