What Kind Of Agreement Is Illegal For Businesses To Make Why Are The Antitrust Laws Controversial
The courts have interpreted Section 1 of the Sherman Act, which prohibits any contract, combination or conspiracy to restrict trade using a basic rule. Therefore, reasonable restrictions that lead to legitimate business practices are legal. But some acts are in themselves unreasonable, such as pricing, and will violate Section 1. Restrictions on trade covered in point 1 include horizontal and vertical trade restrictions. Vertical trade restrictions include maintaining the resale price, commercial refusals and inappropriate territorial restrictions for traders. Horizontal trade restrictions include pricing, exchange of price information where this allows industry members to control prices, production control, regulation of competitive methods, zone allocation, exclusion agreements and boycott measures. Where an application for cartels and abuse of dominance is not a category of dominance, the applicant must demonstrate that the conduct under Sherman Act 1, pursuant to Sherman Act 1, is «prejudicial to the facts of the transaction to which the restriction is applied.»  This essentially means that evidence of an anti-competitive effect is more difficult when an applicant is unable to provide a clear precedent to which the situation is similar. The reason is that the courts have tried to draw a line between practices that limit trade in a «good» way versus a «bad» way. In the first case, the United States v. Trans-Missouri Freight Association, the Supreme Court found that railway companies had acted illegally in creating a transportation pricing organization. The railways had protested that they wanted to keep prices low and not high. The Tribunal found that this was not true, but held that not all «trade restrictions» could be literally illegal. As under the common law, trade restriction must be «unreasonable.» At the Chicago Board of Trade against the United States, the Supreme Court found a «good» trade restriction.
 The Chicago Board of Trade had a rule that commodity traders could not privately accept to sell or buy after the market closed (and then close stores when it opened the next day). The reason the Board of Trade had this rule was to ensure that all traders had the same opportunity to act at a transparent market price. It clearly limited trade, but the Chicago Board of Trade argued that this was an advantage. Brandeis J., who issued a unanimous Supreme Court decision, found that the rule was pro-competition and that it stuck to the basic rule.