Monopolizing and the Sherman Act
74 Pages Posted: 14 Nov 2021 Last revised: 2 May 2022
Date Written: April 30, 2022
In one sentence § 2 of the Sherman Act condemns firms who “monopolize,” “attempt to monopolize” or “combine or conspire” to monopolize -- all without explanation. Section 2 is the antitrust law’s only provision that reaches entirely unilateral conduct, although it has often been used to reach collaborative conduct as well. In general, §2 requires greater amounts of individually held market power than do the other antitrust statutes, but it is less categorical about conduct. With one exception, however, the statute reads so broadly that criticisms of the nature that it is outdated cannot be based on faithful readings of the text.
The one exception is competitive injuries that occur in secondary or complementary markets where they do not realistically threaten monopoly. As markets have become both more networked and more collaborative a significant emergent problem is actions by dominant firms that cause competitive harm in secondary markets. For these, the United States would do better to incorporate an “abuse of dominance’ standard. This approach would be far superior to many currently proposed bills that address the issue of “self preferencing,” or dominant firm favoritism toward their own products. These bills are too narrow in that they single out a small set of firms for adverse treatment, usually without regard to market power. They are also too broad, however, to the extent that they identify a great deal of harmless and socially beneficial conduct as abusive. Currently proposed New York legislation adopting an abuse of dominance standard overreaches in the same way.. An abuse of dominance standard under federal law would require a legislative amendment.
This essay additionally explores several related areas in which antitrust policy toward monopolization should take a different approach, particularly in networked markets. These include 1) Vertical Integration, Refusal to deal and Self-preferencing; 2) Mergers as Exclusionary Practices; 3) Anticompetitive Product Design and Restraints on Innovation; 4) Strategic, exclusionary Pricing; and 5) Anticompetitive Intellectual Property Practices.
Keywords: antitrust, sherman act, monopolizing, section 2, self-preferencing, predatory pricing, anticompetitive design, vertical integration
Suggested Citation: Suggested Citation