Sherman Act was the initial anti-trust law to be passed by the Congress in 1890 with the objective of safeguarding free and liberated antagonism in trade. Stuart has highlighted versatile antitrust laws in his book, ‘The law of Healthcare Administration, 7th edition’. Among them, include the Sherman Act, the Clayton Act, and the Federal Trade Commission Act. The study will focus on the Sherman Act, its interconnection and application to health sector in the United States. According to FTC (2016, Para 2), Sherman Act outlaws “every contract, combination, or conspiracy in restraint of trade,” and any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.”
Analysis of the Sherman Act
Antitrust laws exclude illegitimate amalgamation and business practices, and empower courts to determine the illegal practices based on the facts of every presented case. These Acts govern physicians, health care organizations, and hospitals as well. Since time immemorial, courts have employed antitrust laws to disputable markets with the distinct objective of preserving competition process for consumers’ advantage. These courts have besides maintained strong inducements for businesses to effectively operate, maintain low prices and quality. In the past, the laws were applied by the Supreme Court to prohibit unreasonable trade such as unreasonable partnership for two people. Other acts are perceived harmful to competition and hence illegal. Justification was not allowed among acts, which embraced plain arrangements of competing people of businesses. Penalties for violation of this Act are at times severe as it is treated as a criminal offense by most enforcement agencies.
Sherman Antitrust Act is highly significant to the health care industry as the Acts enables the department conform its behavior patterns to the stipulated laws (FTC, 2016). The health industry has realized that it has no exemption in application of the Act and must integrate it into daily activities. The Act process in the sector is however moving slowly as most of the stakeholders in the sector does not understand its application and its relation with their business activities. By applying the laws, the health sector authorizes the state to supervise the peer-review process even to the private hospitals, thereby reducing chances of hospitals and health practitioners from monopolizing the sector in some regions. Mergers must therefore ensure that the large firms are not in total control of a particular region due to the challenge of setting fixed prices and numerous collusions.
In most cases, physicians who are denied admittance or expelled from their practices often file a suit against the hospitals or organizations claiming violation of the Act. Federal action applies in such circumstances due to the precise association of doctors and the hospitals. Doctors for instance, enjoy staff and privileges from several hospitals, as they are not admitted by a particular hospital. They are accepted for membership by the staff after undergoing the peer review process resulting to admittance. The exceptional association between doctors and the hospitals gratifies the first aspect of the Act. The Act is applicable as physicians being independent contractor amount to economic units in voting sessions. The second aspect of the Act emphasizes presence of restraint of trade in any form of business. According to Stuart (2015), one rule affirms that any restraint of trade in the commercial field can be perceived as inherently illegal. Courts have nevertheless opted to proportional analysis to stabilize pro-competitive and anti-competitive effects of the decisions of the medical staff. For instance, in an event where a physician has a background of incompetent behavior, denial of the privileges can be justified. The last aspect of the Act that emphasizes an action affecting interstate commerce is part of the requirements of the judiciary. This implies that if it is not satisfied then the federal court lacks jurisdiction to solve the case. It is however uncertain whether the decision of a medical staff to offer or deny staff privileges qualifies this element. This is because some of the courts perceive the practice of a single physician acquire minimal effect unlike the effect experienced in interstate business. Other courts accentuates that the activity of a hospital possess jurisdiction elements.
Analysis of the Case study in Chapter
Chapter 12 case study is about Kiefer-Stewart Company versus Segram & Sons, Inc that occurred in 1951 (Stuart, 2015). The Supreme Court decided that the agreement among the competitors in the business to fix utmost resale prices is a violation of the Sherman Antitrust Act. The petitioner was Kiefer-Stewart Company, an Indiana drug company that operated comprehensive liquor business. Respondents in the case included Seagram and Calvert corporations, as affiliated companies that operated in the same liquor in an interstate business to Indiana wholesalers. The complaint charged that an agreement was settled on the supplying the liquor to only those that were willing to resell at fixed prices of the commodity. This agreement divested the petitioner of constant supply of the commodity. During the trial, produced evidence proved that Seagram had fixed maximum prices above the normal set price of the wholesalers. The verdict was returned to the petitioner and damages were awarded. This decision was however reversed after appeal of Seagram as the court concluded that the agreement among the participants did not violate the Sherman Act; instead, it promoted competition. The evidence was besides proved as insufficient prompting the Supreme Court to grant Certiorari.
The Supreme Court ruled that the Court of Appeals made mistakes in holding the Agreement among the competitors as a violation of the Act. In my opinion, the Supreme Court erred in reversing the verdict of the Federal Court. This is because agreements in this nature cripple freedom traders have been enjoying in addition to crippling their efforts of selling according to their individual judgments. Any agreement to fix maximum resale prices is a violation of the Act (Proger, 1990). Evidence produced in the Federal Court was sufficient to prove any finding that the competitors conspired to fix the prices. The treble damages brought to the respondent injured by a conspiracy are not a defense that the complainant conspired to fix the prices in violation of the antitrust laws.
As the first anti-trust law to be passed, the Sherman Act safeguards against free and liberated competition in business. The law, applicable in the health sector guards against any form of conspiracy, monopolization, or combination of both activities. The laws are therefore against any form of illegal business practices in the health sector. In the health sector, physicians have often been denied admittance to perform their practice and enjoy privileges from various hospitals that work under. The act therefore guides against such Acts and ensures that all members of health staff go through peer- review processes. The Act emphasizes company of restraint or trade in all forms of businesses and actions, which affect interstate commerce.
Stuart, J. S. (2015). The law of Healthcare Administration. (7th Ed). Chicago, Illinois: Health
Federal Trade Commission (FTC). The Antitrust Laws. 2016
Proger, A. P. (1990). Application of the Sherman Act to Health Care: New Developments and
New Directions. Antitrust Law Journal. 59 (1):173-190