Public concern about the monopoly power of these giants led to a major shift in U.S policy What had been an economic environment in which the government rarely intervened in the affairs of private firms was gradually transformed into an environment in which government agencies took on a much more vigorous role The first arena of intervention was antitrust policy, which authorized the federal government to challenge the monopoly power of firms head-on The application of this policy, however, has followed a wandering and rocky road The Sherman Antitrust Act The Sherman Antitrust Act of 1890 remains the cornerstone of U.S antitrust policy The Sherman Act outlawed contracts, combinations, and conspiracies in restraint of trade An important issue in the interpretation of the Sherman Act concerns which actions by firms areillegal per se, meaning illegal in and of itself without regard to the circumstances under which it occurs Shoplifting, for example, is illegal per se; courts not inquire whether shoplifters have a good reason for stealing something in determining whether their acts are illegal One key question of interpretation is whether it is illegal per se to control a large share of a market Another is whether a merger that is likely to produce substantial monopoly power is illegal per se Two landmark Supreme Court cases in 1911 in which the Sherman Act was effectively used to break up Standard Oil and American Tobacco enunciated the rule of reason, which holds that whether or not a particular business practice is illegal depends on the circumstances surrounding the action In both cases, the companies held dominant market positions, but Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 844