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Easy Outline of the Jurisdictional Requirements

When the Sherman Antitrust Act was penned in 1890, the world was different than it was today. Localities were different, state’s regulatory capacities were different, and the affect foreign nationals can have on United States commerce were different. Certainly aided by technology to further integrate the world’s business practices laws have needed to be adjusted over time. However, certain key elements of the Sherman Antitrust Act still remain as the bedrock of the law.

First and foremost, since it is a Federal law it goes to claim supreme jurisdiction, placing it above state laws. It also can be applied to any state or individual within the United States having significant impact on restraining interstate commerce. This goes on to apply to foreign nationals of the United States who may restrain interstate commerce or, more likely since outside the territorial US, foreign commerce by US entities.

These were the original jurisdictional parameters of the Sherman Antitrust Act and have served as excellent guidelines even though it was one of the first original antitrust laws. Within the Sherman Act there is a heavy emphasis on the level of anti-competitiveness being exhibited by a person or company with respect to restraining commerce. It has to be a substantial level of restraint. In many cases this would manifest itself blatantly, as can be seen by historical examples.

A local business advertising for their store across the border in their neighboring state is not a substantial level of restraint; granted it may affect the business of the store it is advertising against, but that is the nature of the free market. Such an action would not violate the Sherman Antitrust Act. Standard Oil’s consolidation of operations and elimination of competitors within their original state, subsequent states across the United States and abroad was found to restrain interstate commerce.

Standard Oil would be one of the first companies to be broken apart by the Sherman Antitrust Act, and the reasons are quite clear. By 1909, Standard Oil accounted for roughly 90% of oil refining in the United States and 85% of the profits. While not necessarily illegal, it drew attention to how Standard Oil could be operating so well.

This is what would end up breaking them apart: the use of secret and semi-secret railroads allowing them to use transit and a cut-rate fare price compared to their competitors, espionage against business competitors, monopolizing price rates along pipe lines, and cutting rates so low that it would force local competitors out of business, to name a few charges. In the Standard Oil example, it becomes quite clear what a substantial interstate market constraint ends up being.

However, as business practices have become more advanced, and certainly businesses have developed more and more niche markets where they may only compete against a few companies nationwide, the courts have expanded the Sherman Antitrust Act. While localities were originally under the purview of state legislature, the Federal courts have now deemed the Sherman Act to apply locally as well expanding the jurisdictional area where the Act can be applied.  In many ways, the Sherman Act now can touch any form of interstate commerce across the United States.

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