Antitrust cases occur when the government leads a lawsuit against a company suspected of violating antitrust law. Antitrust law prohibits the monopolization of an organization by means deemed to be illegal. Circumstances alter the criteria of what is considered unlawful. Primarily, the monopolist is accused of exercising power derived from its status as a monopoly, rather than the merit of its product, to set up an unfair system of competition. Although having a monopoly is not in itself illegal, monopolization is. The goal of antitrust laws is to insure that one player does not institute a practice that either creates artificially high prices or restricts the supplies of products.
One of the most broadly known antitrust cases is that of the United States vs. Microsoft. The Department of Justice (DOJ), together with 20 U.S. states, alleged that Microsoft had abused its level of monopoly power. This referred specifically to the manner in which it handled sales of its operating systems and web browsers. The suit was filed against Microsoft on May 18, 1998.
The government had started investigations into Microsoft's activities in 1991, when the Federal Trade Commission met to discuss whether Microsoft was misusing its monopoly status in the PC (personal computer) operating systems market. Microsoft and its president, Bill Gates, refuted such claims, protesting that any attempts to charge them for illegal conduct was a weapon utilized by rival companies envious of their popularity and success.
Although Bill Gates had attempted to defend the Microsoft enterprise by indicating that the computer world depended on the efficiency of the Windows 98 system, what was unveiled in the process was that this constituted an unfair dependence on one product by a single firm. The idea of a competitive economy has as its basis the system of what is advocated as fair competition.
The government thus creates an environment whereby competitive processes can occur through adherence to antitrust laws to insure monopolization does not take place. The browser wars occurring at the time of the action against Microsoft set the stage for the unfolding of events. Microsoft began to offer its browser for free, by bundling it with its operating system, rather than selling each as a separate product. Given the free "gift," it was considered that the company had thus used its power, rather than the quality of its product, to create an unfair advantage.
Judge Jackson issued his report on November 5, 1999, stating that Microsoft had violated antitrust laws in the personal computer operating systems market. He determined that the company had committed monopolization and tying in violation of Sections One and Two of the Sherman Act. He ruled that the two systems had to be broken into separate units for sale purposes. Microsoft appealed, the Judge's remedy was overturned and further proceedings ensued. By November 2, 2001 Microsoft and the DOJ settled the case through an agreement.
Three further cases that acted as precedents of antitrust cases occurred when the government brought lawsuits against AT&T, the Aluminium Company of America (Alcoa) and Kodak.
A suit was filed against AT&T by U.S. Attorney General William Saxbe in 1974. The company was charged with operating as a monopoly in the telecommunications industry. AT&T was forced to divide into seven companies, of which three are still in business today. Five of the companies merged into AT&T Incorporated, with Verizon and Quest the other remaining players. AT&T and what was called "Baby Bells" was a prominent and well publicized antitrust case.
Kodak had come under attack in two antitrust cases brought by the U.S. government in 1921 and 1954. At a certain time Kodak controlled a sizeable monopoly of almost the entire film and camera industry.
The DOJ's case against Alcoa stretched from 1937 to 1944. Alcoa was accused, under the Sherman Act, for restricting trade by monopolist means.
The Standard Oil case of 1911 resulting in the company diversifying into 34 separate competing companies. This case, led by the U.S. government against Standard Oil, under the Sherman Act, served as a precedent for most of the antitrust cases that followed.
The establishment of the Sherman Antitrust Act of 1890, that had been proposed by Senator John Sherman, still serves as the basis by which antitrust cases are upheld. The goal was and remains the prevention of abusive powers by a monopoly and the actions deemed to be monopolization.