What is the difference between Section 1 and Section 2 of the Sherman Act?

What is the difference between Section 1 and Section 2 of the Sherman Act?

• A. Section 1 regulates agreements that restrain trade, whereas Section 2 regulates monopolies.
• B. Section 1 regulates monopolies, whereas Section 2 regulates agreements that restrain trade.
• C. Both Section 1 and Section 2 regulate monopolies.
• D. Section 2 regulates price fixing.

Answer: (A)

The key idea is that the Sherman Act has two distinct prohibitions: one targets restraints of trade arising from agreements, the other targets the abuse or attainment of monopoly power. Section 1 forbids contracts, combinations, or conspiracies that restrain trade between two or more parties. It covers collaborative actions like price fixing or market division, where the illegal effect comes from the agreement itself, sometimes treated as illegal per se or evaluated under the rule of reason. Section 2, on the other hand, makes it unlawful to monopolize, attempt to monopolize, or conspire to monopolize. This focuses on a firm that already has monopoly power in a relevant market and engages in conduct aimed at obtaining, maintaining, or extending that power. Importantly, merely owning a monopoly is not automatically illegal under Section 2; illegality comes from the anticompetitive conduct used to obtain or abuse that power. So the difference is: Section 1 addresses restraints of trade through agreements; Section 2 addresses monopolization and related anticompetitive conduct. The other statements misstate this balance—for example, price fixing is a Section 1 issue, not Section 2, and Section 1 does not regulate monopolies per se.

The key idea is that the Sherman Act has two distinct prohibitions: one targets restraints of trade arising from agreements, the other targets the abuse or attainment of monopoly power. Section 1 forbids contracts, combinations, or conspiracies that restrain trade between two or more parties. It covers collaborative actions like price fixing or market division, where the illegal effect comes from the agreement itself, sometimes treated as illegal per se or evaluated under the rule of reason. Section 2, on the other hand, makes it unlawful to monopolize, attempt to monopolize, or conspire to monopolize. This focuses on a firm that already has monopoly power in a relevant market and engages in conduct aimed at obtaining, maintaining, or extending that power. Importantly, merely owning a monopoly is not automatically illegal under Section 2; illegality comes from the anticompetitive conduct used to obtain or abuse that power.

So the difference is: Section 1 addresses restraints of trade through agreements; Section 2 addresses monopolization and related anticompetitive conduct. The other statements misstate this balance—for example, price fixing is a Section 1 issue, not Section 2, and Section 1 does not regulate monopolies per se.