The Antitrust Laws of the United States of America: A Study of Competition Enforced by Law

By A. D. Neale | Go to book overview

CHAPTER IV
MONOPOLIZATION. 1. THE CRITERIA FOR OFFENCES UNDER SECTION 2 OF THE SHERMAN ACT

1. Section 2 of the Sherman Act; monopoly and monopolizing; the legal meaning of 'intent'; the significance of the remedies to be achieved

The previous chapters have dealt with restraints of trade proceeding out of agreement or combination between competitors: the position of power in the market which is achieved by combination is typically used to influence the level of prices or to exclude competitors from the market. Sometimes a position of power in the market is achieved by a single firm which thereby becomes capable of producing the same economic effects as a combination. Section 2 of the Sherman Act is designed to bring this type of situation within the scope of antitrust. 'Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any 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 misdemeanour. . . .' In this and the two subsequent chapters the case-law under section 2 will be examined.

There are a number of important differences between the considerations that the courts must have in mind in section 2 cases and those which have been shown to apply to section I. Perhaps the most important is the broader scope for the Rule of Reason under section 2; monopoly as such is not and cannot be illegal per se. The reason for this is obvious. The first firm to bring a new product on to the market is inevitably a monopolist for a time, but it would be ludicrous to charge it with a criminal offence against the system of free competition. A town of 25,000 people may be unable to support more than one newspaper; here again it would be absurd to regard the publisher's monopoly as criminal. Then, too, it is always possible in a competitive system that a firm, by its sheer efficiency, will -- for a time at least -- win the competition; in terms of business folklore it may simply have 'made a better mousetrap' and attracted all or nearly all the demand for mousetraps. This must surely be counted a success of the competitive system, not an assault upon it.

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