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The drawbacks of antitrust law
The antitrust laws aim to
Antitrust policy case study
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In the 1800’s there were several businesses known as trusts. These “trusts” owned the entire industry. Railroads, sugar, oil, and steel were some of the major products that were controlled by these trusts. U.S. Steel and Standard Oil were two big companies that were famous for controlling their product and the industry it was a part of.
The oil industry was an easy industry to be monopolized because the deposits were rare. The Standard Oil Company was incorporated by John D. Rockefeller in Ohio in 1870. At the time, the refining business was highly competitive, and Standard Oil had more than 250 competitors. Rockefeller and his associates took advantage of both the scarcity of oil and the returns produced from it to lay down a monopoly, with no help from the banks. The industry practices and questionable strategy that Rockefeller used to form Standard Oil made the Enron mass feel ashamed, but the completed product was not near as harmful to the market or the environment as the industry was previous to Rockefeller monopolizing it.
There once were a lot of oil companies competing to make the most of their find. Companies would pump waste products into the rivers or on the ground because it cost too much for research on how to dispose of it properly. They also slashed costs by pumping through poor pipelines that were famous for seepage. Standard Oil eventually owned 90% of oil production and distribution in the United States, and they had learned how to make money off of their waste products. Vaseline was one of many of the new products formed.
Andrew Carnegie went a lengthy way in producing a monopoly in the steel industry U.S. Steel, a gigantic corporation nearly reaching the magnitude of Standard Oil. U.S. Steel ...
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Antitrust: An Overview. ANTITRUST. Legal Information Institute. Cornell University Law School. http://www.law.cornell.edu/wex/Antitrust
Sherman Anti-Trust Act. LawBrain. http://lawbrain.com/wiki/Sherman_Anti-Trust_Act
Clayton Act. LawBrain. http://lawbrain.com/wiki/Clayton_Act
Herbert Hovenkamp. Clayton Act (1914). Enotes. Major Acts of Congress, ©2004 Gale Cengage. http://www.enotes.com/clayton-act-1914-reference/clayton-act-1914
Herbert Hovenkamp. Federal Trade Commission Act (1914). Enotes. Major Acts of Congress, ©2004 Gale Cengage. http://www.enotes.com/federal-trade-commission-act-1914-100734-reference/federal-trade-commission-act-1914
Herbert Hovenkamp. Sherman Antitrust Act (1890). Enotes. Major Acts of Congress, ©2004 Gale Cengage. http://www.enotes.com/sherman-antitrust-act-1890-101422-reference/sherman-antitrust-act-1890
The Gilded Age refers to a period in which things were fraudulent and deceitful; the surface was clinquant while underneath that lustrous coat laid corruption. During the Gilded Age companies recruited to corrupt methods to further increase profits, leading to an increase in power, rapid economic prosperity, and domination of industries, leading to monopolistic corporations. As a result, antitrust laws to regulate business began to emerge in the late 19th and early 20th century known as the Progressive Era. Among these companies was Standard Oil, which was founded in 1870 by John D. Rockefeller; in 1880, Standard Oil was responsible for refining 90 percent of America’s oil and between 1880-1910, dominating the oil industry (Marshall). The lack of intervention from the government and regulations impeding monopolistic practices allowed Standard Oil to
When John D. Rockefeller merged with the railroad companies, he had gained control of a strategic transportation route that no other companies would be able to use. Rockefeller would then be able to force the hand on the railroads and was granted a rebate on his shipments of oil. This was a kind of secret agreement between the two industries. None of the competition knew what the rates were for the rebates or the rates that Rockefeller was paying the railroad. This made it hard for the competition to keep up with the Standard Oil Company. The consequences led to many oil companies getting bought out by Rockefeller secretly. All in all, 25 co...
Andrew Carnegie had no competition. By 1900 Carnegie Steel produced more metal than all of Great Britain. He controlled almost all of the steel produced and used in America. Carnegie used vertical integration, which means that he owned all the companies and resources need to make and process steel, thus giving him the edge and he was able to cut down costs.
He went to London in 1872, saw the new Bessemer method of producing steel, and returned to the United States to build a million-dollar steel plant. Foreign competition was kept out by a high tariff conveniently set by Congress, and by 1880 Carnegie was producing 10,000 tons of steel a month, making $1 1/2 million a year in profit. By 1900 he was making $40 million a year, and that year, at a dinner party, he agreed to sell his steel company to J. P. Morgan. He scribbled the price on a note: $492,000,000.”
This is a description of the Sherman Act. It gives a brief history of the Act and explains its function.
The anti-trust laws were set in place to promote vigorous competition but also to protect the consumer from unfair mergers and business practices. The first antitrust law that was passed by Congress is called the Sherman Act and is a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade” according to www.FTC.gov . Later in 1914 Congress passed two more laws, one creating the Federal Trade Commission Act (FTCA) and then the Clayton Act, which now create the three core federal antitrust laws that are still active currently. Although they have changed over the last hundred years, they still have the same concept: “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up” as stated by the FTC.gov website on The Antitrust Laws.
However, the reason Rockefeller controlled 90% is because of a company that basically appeared from nowhere and had some actual competition for Standard Oil and actually surprised Rockefeller. The company was known as the Tidewater Pipe-line Company, it started by building a pipeline from north Pennsylvania to Williamsport. Rockefeller tried to acquire the company but in the end it ended up as Standard only competition with Tidewater controlling 10% of the oil refining market. This was however of not a large concern to Standard as they were developing products besides oil from Vaseline to candy.
With John seeing drilling as risky, his chosen path was refining. In 1865, John bought out Andrews, Clark, and Rockefeller, gaining complete control. John borrowed tens of thousands of dollars, and reinvested all profits to make his company continuously grow. Expansion of his refining company skyrocketed. John greatly disliked waste, he was devoted to increasing efficiency. John 's company conducted research and development of new and better products. Kerosene was the main product, used for illuminating oil. One barrel of oil yielded sixty five percent illuminating oil (kerosene), ten percent gasoline, and five to ten percent benzoyl, the remainder being tar and waste. The drilling industry was overwhelmed with drilling and overproduction.
Oil has always been a coveted natural resource. Oil was discovered in the United States in 1859; since it was a young industry, it was without any structure. That is where John Davison Rockefeller stepped in. John Rockefeller was at one point one of the richest men in the world, monopolizing the oil industry which played a major role in shaping the economy.
Andrew Carnegie was known as the "Captain of the Steel Industry". He was a Scottish immigrant who made his money in steel.
9. Sherman Anti-Trust Act – 1890 – forbade combinations in restraint of trade, without any distinction between “good” and “bad” trusts.
The Sherman Antitrust Act of 1890 was an early attempt to try to control abuses by large combinations of businesses called trusts. The Act was weakened by the Supreme Court used against labor unions rather than against monopolies. Roosevelt’s first push for reform on the national level began with a secret antitrust investigation of the J. P. Morgan’s Northern Securities Company whom monopolized railroad traffic. After successfully using his powers in government to control businesses, Roosevelt used the Sherman Antitrust Act against forty-three “bad” trusts that broke the law and left the “good” trusts alone.
...o chance of competing with Standard Oil due to all the tactics they employed to keep their prices low. This ravished small town families and had a similar effect as to what Wal-Mart does to family run shops nowadays. Numerous families living in small town America lost their income because of Standard Oil and forced hardship upon many.
Andrew Carnegie, the “King of Steel”, the benevolent employer, the giant of industry, was among the greatest influences of the second industrial revolution. It is sometimes questioned whether Carnegie was the ruthless, sneaky steel tyrant some made him out to be, or the generous, benevolent education benefactor he appeared to be. I believe him to be a combination of both, but more so the great giant of industry.
Carnegie saw how bad the wooden railroads were, so he proceeded to slowly replace them with iron ones. Carnegie's charm, perception, and hard work led to becoming one of the world's most famous men of the time, and led to the first corporation in the world with a market capitalization in excess of one billion when he sold his companies to John Morgan who called them United States Steel Corporation.