The Agreement in Restraint of Trade Contract Act is a law that prohibits contracting parties from restricting competition in the marketplace. The act was initially passed in 1936 to prevent monopolies and limit the power of large corporations in the United States. The law is also known as the Sherman Antitrust Act of 1890.
The Act prohibits agreements between two or more parties that restrict competition, unfairly limit trade, or result in a monopoly. The law applies to all businesses that operate in the United States, regardless of their size or industry. The Act is enforced by the Department of Justice and the Federal Trade Commission.
The Act distinguishes between two types of agreements: per se violations and rule of reason violations. Per se violations are agreements that are considered inherently anticompetitive, such as price-fixing or market allocation. Rule of reason violations involve agreements that may have some anticompetitive effects but also have legitimate business purposes.
Per se violations are prohibited under the Act and are subject to criminal penalties. Rule of reason violations are evaluated on a case-by-case basis and may be subject to civil penalties or injunctive relief.
The Act also provides for private causes of action, which allows individuals and businesses to sue for damages resulting from anticompetitive behavior. Private plaintiffs can recover treble damages, which are damages equal to three times the amount of actual damages.
The Act has been instrumental in promoting competition and preventing monopolies in the United States. It has been used to break up large corporations, such as Standard Oil and AT&T, and to prevent anticompetitive behavior in industries ranging from healthcare to technology.
In conclusion, the Agreement in Restraint of Trade Contract Act is a critical law that promotes competition and prevents anticompetitive behavior in the United States. It is important for businesses to understand the Act and its implications when entering into contracts or engaging in business practices that may restrict competition. Failure to comply with the Act can result in severe penalties, including criminal prosecution and civil damages.