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In a freely competitive market each competing business generally will try to attract consumers by cutting its prices and increasing the quality of its product or services Competition and the profit opportunities it brings also stimulate businesses to find new innovative and more efficient methods of production Consumers benefit from competition through lower prices better products and services The first US legislation to curb agreements that restrict trade and reduce economic competition was the Sherman Antitrust Act which was passed by Congress in 1890 It made it illegal to monopolize any part of trade or commerce in the US In the early 1900s Congress used the act to break up two monopolies the Standard Oil Co and the American Tobacco Co In 1914 Congress passed two more laws that further protected the competitive marketplace The Clayton Antitrust Act outlawed the following Trusts formed by two companies with interlinking boards of directors Fixing prices in agreement with other businesses offering competing products Making agreements with other businesses to control the supply and price of a product Abusing power to gain or maintain a monopoly Soon after Congress established the Federal Trade Commission to enforce antitrust laws The FTC has the power to stop companies temporarily from using suspected anti-competitive practices while the Justice Department probes and prosecutes businesses When the US government establishes in court that a company has been involved in antitrust activities it can do the following Break up the monopoly into well-defined components Force businesses to tell customers about competitors Force monopoly to distribute competing products Some famous antitrust cases Year 1911 Company American Tobacco Result Declared illegal monopoly broken up into separate companies Year 1911 Company Standard Oil Result Broken up into separate oil refining and pipeline companies Year 1920 Company US Steel Result No illegal monopoly found Year 1982 Company IBM Result Accused of being illegal monopoly case dropped Year 1983 Company ATT Result Accused of being illegal monopoly broken
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