Antitrust laws in the United States – commonly known as competition laws outside of the U.S. – have evolved over the years with an ongoing effort to maintain and support fair competition. The major statute which concerns antitrust law is the Sherman Antitrust Act, originally enacted in 1890. One of the primary goals of the Sherman Act is to investigate, restrict, and reduce monopolies.
A monopoly exists when one person, group, or company is the exclusive supplier of a particular type of product. This means that one entity controls the supply of a good or service, giving that entity an enormous amount of power in negotiating the provision of that good or service. Ultimately that leads to unnecessarily high prices.
For example, American Telephone & Telegraph (AT&T) was a monopoly during much of the twentieth century in the United States in which the company held a monopoly on phone service. Indeed for seventy years, AT&T maintained the slogan: “One Policy, One System, Universal Service.” The company continued to grow in strength as it began buying smaller telephone companies such as Western Union Telegraph. While the government allowed the monopoly for many years, it finally broke up the company in 1984, with the division of AT&T into seven companies, of which only three remain today: AT&T, Verizon and Qwest.