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Monopoly and Monopolization -- Fundamental But Separate Concepts in U.S. Antitrust Law

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Publication Date: May 2005

Publisher(s): Library of Congress. Congressional Research Service

Series: RS20241

Topic: Law and ethics (Commercial law)

Abstract:

Antitrust doctrine holds that viable competition will best protect consumers; it is concerned with the viability of individual competitors only insofar as their fates affect marketplace competitiveness. Moreover, the Rule of Reason generally modified "competition" with "reasonable." Viewed in the context of the Rule of Reason, the general prohibitions against monopolization and attempted monopolization (Sherman Act § 2, Clayton Act §7) and any assessment of "unfair acts" in commerce (Federal Trade Commission Act § 5) require two inquiries: whether an entity is in fact a monopolist; and whether that monopolist has unlawfully monopolized the market(s) within which it operates (the applicable, "relevant market," which may be either productor geographically based, or both).

This report will attempt to illustrate the difference between the concepts of "monopoly" and "monopolization" by touching on the monopoly/monopolization thinking in the Antitrust Division of the Department of Justice (DoJ) and the Federal Trade Commission (FTC), as illustrated in (1) statements on merger enforcement made by recent antitrust enforcement officials (generally indicative of the agencies' concerns about competitive conditions and the effect of various market transactions), (2) the 1992 Horizontal Merger Guidelines 2 and (3) some observations on the Government actions against the Microsoft and Intel Corporations.