Trusts and monopolies are concentrations of wealth in the hands of few. Such conglomerations of economic resources are thought to be injurious to the public because they minimize, if not obliterate, normal marketplace competition and yield undesirable price controls. In turn, markets stagnate and individual initiative weakens.
In 1890, Congress introduced the first act to prevent “business trusts” from restraining trade. The Sherman Act is the main source of antitrust law. It applies to all interstate transactions and business. If the activities are local, the act applies to transactions affecting interstate commerce.
The Clayton Act was passed in 1914, prohibiting price fixing, bid rigging and exclusive sales contracts for companies competing in the same field. Most importantly, the act forbade acquisitions and mergers that decreased competition. In addition, the act legalized peaceful boycotts and strikes, declaring that human labor was not a commodity that could be suppressed by injunctions or otherwise controlled unfairly.
In 1915, the Federal Trade Commission Act set up the Federal Trade Commission to function as an independent agency of the U.S. government. The FTC’s primary mission has been to oversee and promote consumer protection along with free and fair business competition. The five members of the FTC, known as commissioners, are selected by the president and confirmed by the Senate.
These three acts form the basis for modern-day antitrust and trade regulations at the federal level, with most states adopting similar acts.