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TheStreet Open House

Apple Faces Sherman's March

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Twice in the last few weeks Apple (AAPL - Get Report) has found itself on the receiving end of government antitrust enforcement.

Just as the dust was settling on the charge that Apple conspired to fix the price of e-books with major publishers, a judge said Apple will have to stand trial in antitrust suit alleging it conspired with Google, Intel and other Silicon Valley heavyweights not to steal each others employees.

Antitrust is not mentioned in the Constitution, although Thomas Jefferson did write about what he called "monopolies," which were in fact patent and copyright laws.

The question of corporate antitrust is a great Republican invention, and John Sherman, "the Ohio Icicle" and younger brother of William Tecumseh Sherman (of whom many in my home state of Georgia have heard) is the father. The 1890 Sherman Antitrust Act makes for some intense reading:

Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal....
Section 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.

Note that the law doesn't only prohibit single companies from monopolizing enormous markets. It also prohibits any restraint of trade, engaged in by one or several. And it's a felony.

Note, too, that in the case of the antitrust law, "person" can refer to a corporation.

Tough stuff.

In practice, antitrust enforcement tends toward civil actions, with the Justice Department making requests through judges to break contracts or to hold defendants to specific actions aimed at keeping them from using a market position to lock out competitors.

In our time, of course, the whole idea of antitrust has become controversial, and when Republicans are in the White House the antitrust division turns quiescent.

Maybe if Apple stalls and writes big enough checks to buy Mitt Romney the White House, it can have the dogs called off.

Meanwhile, Mr. Sherman's troops are going to take a long march through Apple's books and the way it does business. Apple CEO Tim Cook might be wise to take a tip from a Georgian. That's not a march you want to see.

At the time of publication, Blankenhorn owned shares of Apple, Google and Intel.

Dana Blankenhorn holds no positions in any of the securities mentioned in this article.

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