Final answer:
The 'Rule of Reason' is a legal doctrine used by the Supreme Court to evaluate antitrust cases, prominently in the breakup of monopolies like Standard Oil and American Tobacco. These cases determined that monopolies which restrain trade or competitive practices violate antitrust laws, leading to significant shifts in business practices and antitrust enforcement.
Step-by-step explanation:
The Rule of Reason is a doctrine adopted by the Supreme Court to determine under which circumstances particular restraints of trade violate antitrust laws. This doctrine played a pivotal role in major cases such as the Standard Oil and American Tobacco cases. In 1911, the Supreme Court applied the Rule of Reason when it ruled against the Standard Oil Company, which controlled an overwhelming 90 percent of the nation's oil refineries and was considered a monopoly, leading to the company being broken into 34 independent firms. Similarly, the Court employed the Rule of Reason to judge the actions of the American Tobacco Company, which also led to the organization's dissolution into various independent entities.
These landmark cases established the precedent that not all monopolies were harmful, but those that hindered competition or exploited monopolistic power typically violated the Sherman Antitrust Act. The intent behind these cases and the enforcement of the antitrust laws was to ensure fair competition and prevent companies from becoming too powerful and controlling entire markets to the detriment of consumers and the economy. These early cases influenced how antitrust laws were interpreted and enforced for years to come.