What is the SHERMAN ACT?

The Sherman Act prevents certain contracts, combinations, or conspiracies in restraint of trade or commerce, and industry monopolies and attempts to monopolize. The following are the basic concepts behind the Sherman Act.

What is a contract, combination, or conspiracy in restraint of trade?

Section 1 of the Sherman Act prohibits contracts, combinations, and conspiracies in restraint of trade or commerce, but it does not define these types of agreements. Common law surrounding the Sherman Act identifies numerous forms of concerted actions between market competitors or members of the value chain that have the intent or effect of restraining trade in the relevant product or service market. These relationships are generally broken into vertical restraints and horizontal restraints of trade. The various types of vertical and horizontal trade are discussed individually.

Note: While these above definitions appear to be broad, interdependent or independent activity is not a restraint of trade and will not give rise to a cause of action under Section 1.