ACADEMY ASSOCIATION OF ECONOMICS CERTIFIED CHARTERED ECONOMISTS CHE CEPA

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else to restrict trade. In the early 1900s, the government used the act to break up John D. Rockefeller's Standard Oil Company and several other large firms that it said had abused their economic power. In 1914, Congress passed two more laws designed to bolster the Sherman Antitrust Act: the Clayton Antitrust Act and the Federal Trade Commission Act. The Clayton Antitrust Act defined more clearly what constituted illegal restraint of trade. The act outlawed price discrimination that gave certain buyers an advantage over others; forbade agreements in which manufacturers sell only to dealers who agree not to sell a rival manufacturer's products; and prohibited some types of mergers and other acts that could decrease competition. The Federal Trade Commission Act established a government commission aimed at preventing unfair and anti-competitive business practices. Critics believed that even these new anti-monopoly tools were not fully effective. In 1912, the United States Steel Corporation, which controlled more than half of all the steel production in the United States, was accused of being a monopoly. Legal action against the corporation dragged on until 1920 when, in a landmark decision, the Supreme Court ruled that U.S. Steel was not a monopoly because it did not engage in "unreasonable" restraint of trade. The court drew a careful distinction between bigness and monopoly, and suggested that corporate bigness is not necessarily bad.

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Friedrich August von Hayek, 1974 Nobel Prize Winner

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