World Library  
Flag as Inappropriate
Email this Article

Monopolization

Article Id: WHEBN0006566528
Reproduction Date:

Title: Monopolization  
Author: World Heritage Encyclopedia
Language: English
Subject: Concentration of media ownership, Cellophane paradox, Competition regulator, International Competition Network, Spectrum Sports, Inc. v. McQuillan
Collection:
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Monopolization

In US antitrust law, monopolization is an offense and the main categories of prohibited behavior include exclusive dealing, price discrimination, refusing to supply an essential facility, product tying and predatory pricing. Monopolization is an offense under Section 2 of the American Sherman Antitrust Act 1890. It has a specific legal meaning, which is parallel to the "abuse" of a dominant position in EU competition law, under TFEU article 102. The Sherman Act 1890 §2 states that any person "who shall monopolize . . . any part of the trade or commerce among the several states, or with foreign nations shall be deemed guilty of a felony." Section 2 also forbids "attempts to monopolize" and "conspiracies to monopolize." Generally this means that corporations may not act in ways that have been identified as contrary to precedent cases.

Jurisprudential meaning

Under long-established precedent, the offense of monopolization under Section 2 has two elements. First, that the defendant possesses monopoly power in a properly-defined market and second that the defendant obtained or maintained that power through conduct deemed unlawfully exclusionary. The mere fact that conduct disadvantages rivals does not, without more, constitute the sort of exclusionary conduct that satisfies this second element. Instead, such conduct must exclude rivals on some basis other than efficiency.

For several decades courts drew the line between efficient and inefficient exclusion by asking whether the conduct under scrutiny was "competition on the merits." Courts equated such competition on the merits with unilateral conduct such as product improvement, the realization of economies of scale, innovation, and the like. Such conduct was lawful per se, since it constituted the normal operation of economic forces that a free economy should encourage. At the same time, courts condemned as "unlawful exclusion" tying contracts, exclusive dealing, and other agreements that disadvantaged rivals.[1] This distinction reflected the economic theory of the time, which saw no beneficial purposes for what Professor Oliver Williamson has called non-standard contracts.

More recently, courts have retained the safe harbor for "competition on the merits." Moreover, the Supreme Court has clarified the standards governing claims of predatory pricing. At the same time, they have relaxed the standards governing other conduct by monopolists. For instance, non-standard contracts that exclude rivals are now lawful if supported by a "valid business reason," unless the plaintiff can establish that the defendant could achieve the same benefits by means of a less restrictive alternative.[2]

See also

Notes

  1. ^ See, e.g., United States v. United Machinery Co., 110 F. 295 (D. Mass. 1953).
  2. ^ See Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992).

References

This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 



Copyright © World Library Foundation. All rights reserved. eBooks from World eBook Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.