Interstate commerce is any business that is conducted across state borders. Interstate commerce can include business conducted between individuals or entities in two states or more than two states.
The Interstate Commerce Act is a Federally enacted law which had the original intent of preventing a monopoly from controlling commerce between states. In 1887, the Federal Interstate Commerce Act was enacted to prevent the railroad industry from having control over interstate commerce, as that was one of the only means of transferring goods between states.
The Interstate Commerce Act was meant to prevent the railroad company from charging higher rates for short hauls than for long hauls and required that they give those rates up front. Prior to the passage of the Act, railroad companies were able to charge whatever price they wanted, as there was very little competition for the transportation of goods between the states.
The Interstate Commerce Act led to the creation of the Interstate Commerce Commission. The Commission was in charge of monitoring the railroad companies to be sure that they followed the new law and did not charge customers more than they were supposed to or more than they had posted for a particular distance.
The Interstate Commerce Act was created to prevent monopolies from taking advantage of businesses that conducted business across state lines. In fact, the Interstate Commerce Commission had no control over regulating businesses which conduced business within one state.