Enforcing Competition Laws in Economy

723 Words3 Pages
The US has some of the strongest laws concerning competition of any industrialized country. Under laws dating back to the 1890s, a conspiracy in restraint of trade is a criminal offence - and companies are treated like individuals, with their bosses personally responsible for their firms' actions. In the late 19th Century, the booming US economy entered a period of rapid consolidation. "Trusts" (or holding companies) were created to bring together all the firms in a particular industry - The Sugar Trust, The Tobacco Trust, and The Steel Trust. These trusts were vast enterprises that dominated their industry and in some cases production worldwide. No trust was bigger than Standard Oil, owned by John D. Rockefeller. In 1910 Mr. Rockefeller's net worth was equal to nearly 2.5% of the whole US economy, the equivalent of nearly $250bn in today's terms, or at least twice as much as Bill Gates. The opposition to the trusts, particularly among farmers who protested against the high cost of rail transport to take their products to the cities, led to the passage of the first anti-trust law - The Sherman Act - in 1890. But it was more than 20 years later when Standard Oil was brought before the courts. The historic 1911 decision broke up Rockefeller's company into six main entities. These were, Standard Oil of New Jersey (now Exxon), Standard Oil of New York (now Mobil), Standard Oil of Ohio, and Standard Oil of Indiana (Amoco, part of BP) and Standard Oil of California (now Chevron). They opened the way for new entrants like Gulf and Texaco, which discovered oil in Texas. First Chevron acquired Gulf in 1984 in what was then the largest corporate merger in US history. In an ironic twist, the 1990s have seen the oil industry come back together. Exxon merging with Mobil to form a company twice as big as its nearest rival - BP Amoco (which also consists of two old Standard Oil companies (Amoco and Standard Oil of Ohio) and has been trying to merge with a third (Arco, formerly Atlantic Petroleum of Pennsylvania). The three big oil companies now control almost as much of the market as Rockefeller did. But the blocking of the deal to give BP Amoco control of America's largest oil field in Alaska, by acquiring Arco, shows that business is beginning to regroup. This time, the targets were two of America's biggest companies - IBM and AT&T.

More about Enforcing Competition Laws in Economy

Open Document