Question

Explain why Congress created the Sherman Anti-Trust Act. a) To promote fair competition and prevent monopolies in the market. b) To establish government control over business practices. c) To encourage the growth of large corporations. d) To protect consumers from foreign trade.

Answer 1

Congress created the Sherman Antitrust Act in 1890 to counter the rise of monopolies or 'trusts' during the industrialization. Its primary function was to promote fair competition by giving the government power to break up these monopolies and regulate market practices. This was the first step towards various laws that prevent anticompetitive practices in the market.

Step-by-step explanation:

The Sherman Antitrust Act was created by Congress in the wake of industrialization to counter the rise of monopolies and promote fair competition in the market. Large companies operated as a 'trust,' where group of formerly independent firms were ran collectively as a single company. Many of these trusts effectively monopolized industries, reducing competition and instigating a need for government regulation with the implementation of Sherman Antitrust Act in 1890.

This Act gave the government the authority to break up these trusts. One notable example is the breakup of Standard Oil in 1911, which at the time controlled about 90% of the country's oil refining. This law paved the way for other antitrust laws aimed at curbing anticompetitive practices and protecting consumers, such as the Clayton Antitrust Act and the Federal Trade Commission Act.

These laws are continually enforced by the Federal Trade Commission and the U.S. Department of Justice in the present to prevent anticompetitive practices and ensure a healthy, competitive economic environment.

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