On July 2, 1890 Congress passed the Sherman Act. The Sherman Act was one of the first antitrust laws passed by Congress. The Federal Trade Commission so aptly describes the Sherman Act as:
“The Sherman Act outlaws “every contract, combination, or conspiracy in restraint of trade,” and any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.” Long ago, the Supreme Court decided that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable. For instance, in some sense, an agreement between two individuals to form a partnership restrains trade, but may not do so unreasonably, and thus may be lawful under the antitrust laws. On the other hand, certain acts are considered so harmful to competition that they are almost always illegal. These include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids. These acts are “per se” violations of the Sherman Act; in other words, no defense or justification is allowed.”
To this day, we are still working out the kinks to the definition of what is an “unreasonable restraint of trade.” Happy Sherman Act Day!