Video Transcript: Sherman Antitrust Act

Hello, welcome back. In this video, we're going to discuss the Sherman antitrust  laws. Now, we spoke in the last video about monopolies and the antitrust  government policy that is is enacted to regulate monopolies. Well, we're going to discuss specific law that is still law today, the Sherman Antitrust Act, and we'll  discuss on how it's implemented, why it's implemented, and why it's effective for  our small businesses or businesses in general who look to monopolize U.S.  economy in the late 1800s, right? We need to look at this abundant natural  resources, right? You got to think in the in the 1800s, especially the late 1800s,  the Industrial Revolution was just in its infancy, right? Things were the  technology was coming on board, things were being able to be mass-produced,  and so so the the especially in the United States because we have natural in the United States we have natural resources that are abundant, right? So we have  you know people with great wealth that came in and wanted to create a  business like Standard Oil, you know, owned by the Rockefellers, or you know,  natural gas, or whatever. You know, railroad industry, things like that, right? So  you had one group, one person, one entity that would own all of the oil or own  all of the railroads, right? So they wanted to. The government wanted to come in and make industries more competitive, right? So that more people could get a  piece of the action and the profits, and so more people could have jobs, and the  economy could grow naturally, right? Instead of being just leveraged by one  entity, and they control the cash flow and the revenues and the expenses in one  single industry, the government looks to create and promote competition. So this is some healthy regulation by the government that actually is going to benefit the consumer and the natural market, right? So let's look next. So look, we had a so the U.S. economy in the late 1800s had a willing and able workforce, along with  abundant natural resources. Right, so we had a pro-business regulation. So  they were set up as pro-business. We want to see economic growth. Advances  in technology were happening rapidly. As again, this was the infancy of the  Industrial Revolution. John D. Rockefeller and Andrew Carnegie capitalized on  the Industrial Revolution by establishing huge corporations in the oil and steel  industries. This period of economic expansion increased quality of life for most,  enabled us to have low unemployment and opportunities for innovation and  entrepreneurship, also introduce threats to the free market. So, again, we'll kind  of talk about a monopoly during the Industrial Revolution in the late 1800s for  the first time in the U.S. economy. The consumer experience, the power that can come from a monopoly, right? A monopoly is a single company that controls an  entire industry. So, if you a monopoly may not always be beneficial to the  consumer because if they're the only competition in the industry, they can  charge whatever they want, right? So this is why the government has got to  come in and regulate that because if they are holding this industry hostage and  they have the ability to raise prices or lower prices as they seem fit. What's to  what's to stop them from you know offering their products at an exorbitant price?

You know, a very large price where you know it prices out to consumers, but you know they're making a ton of money because the products are expensive, so  they don't have to sell as much, right? So we we want to make sure that the  government wants to make sure that consumers have a fair and equal  opportunity to purchase products in the market that is fair but still free. They  want to create competition in the market. So let's look at the threat of  monopolies and trusts. Right, regulators struggle with how to continue to create  a business-friendly environment, but also protect consumers from potential  abuses of a monopoly. When a company controls an entire market, it has no  competition. It is able to keep supply artificially low, forcing prices up.  Remember what we just talked about, right? They want to. They keep. They can keep. They just. They keep the supply tight, forcing prices up, pricing consumers out of the market. But they don't have to sell as much. To make to make the  same amount of money, if not more, because they're raising prices. Monopolies  can fix prices to achieve outrageously high margins, as we just discussed. The  United States was the first, was the freest market in the world at this time, but it  was also clear to regulators that an efficient free market system was only  possible with competition, right? There, you know, a free market. If there, it's not  really free if there's one company that controls the entire industry, right? It's not  really free then because they are dominating this industry. So now, if we can  piece in competition, now they have to worry about what they're doing and what  their pricing is like, and now they have to kind of go in and compete with them.  So if their price is up here, and you have a competitor that comes in and  undercuts them, naturally their prices are going to have to fall so that they don't,  you know, go bankrupt or you know they're going to lose a ton of sales volume if they're staying at a high price while another company comes in and offers at a  low price. You know, consumers are naturally going to migrate to the lower  priced product as long as the quality is similar, right? So this is why the  government wanted to create an efficient free market system, but through  evidence, it was only you know able to do that through promoting competition,  right, and making it fair for the consumer and offering better prices in the market. So, what is the Sherman Antitrust Act? Right, is the first major federal antitrust  law. It targeted to at breaking up monopolies, it prohibited two type, or it actually  prohibits two types of anti-competitive business behavior: one contracts,  combinations, or conspiracies and restraint for trade or commerce policies or  monopolies and attempts to monopolize. So they want to make sure one  obviously collusion, right? The first point we're talking about collusion here,  right? We don't want companies coming together to collude, or maybe even  merging, right, or being acquired, right, being bought out, because now once  they collude, you're kind of shifting into a monopoly, and you are setting yourself up to be a dominant player or the only player controlling the movement of  revenues in that space. Obviously, they want to prohibit the monopolization of 

firms. So the Sherman Anti Trust Act does fail to define what a contract  combination or conspiracy in restraint of trade is, but it's more or less known as  collusion. Right? They want to prevent the collusion, you know, from being a  factor in monopolization of firms based in the common law interpretation of  federal courts.