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The US antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations to promote fair competition for the benefit of consumers.
It exists to keep a check on companies to prevent the formation of monopolies, which can limit consumer choices and be detrimental to the economy in the long run.
The Federal Trade Commission, the US Department of Justice and state government and private parties that are deeply affected by antitrust practices can bring cases like these to courts to enforce the laws. The scope of antitrust laws is a debate among lawmakers and different governments. One the one hand, it protects small businesses from being forced out of the market due to unfair competition, and on the other hand, it is unfair to the services and inventions of private parties as they are unable to attain maximum profits. It was recently brought up during the decision to repeal net neutrality. The decision was almost universally panned by the general public and lawmakers as being detrimental to the equality and the fairness of the internet and its access to all types of information.
However, there have been quite a few cases of large companies butting heads with the US government on antitrust laws in the past that have involved everything from computers to the oil industry. Here are a few cases that became infamous in the twentieth century.
AT&T
AT&T is one of the oldest telecommunications companies in the United States. Although it is no longer the only one, with Verizon, T-Mobile, Sprint and others competing for the crown, it most certainly has the widest reach as compared to the other companies.
In the 1970s, however, the company enjoyed a monopoly status and did so unchecked for many years. However, that began to change in 1974 when the Attorney General for the United States filed a suit against the company. It took a total of seven years and four attorney generals to administer the case before it was finally resolved.
The case has raised serious concerns about the viability of antitrust enforcement. For many years, AT&T was considered a natural monopoly, and when the government suddenly took action, it seemed like a shift in the government’s understanding of what a monopoly was. This natural monopoly defense has been used several times for other companies in similar antitrust cases. The Aluminum Company of America, for example, became the only producer in the United States, with control of many production plants. It took steps to secure this status such as obtaining exclusive rights to certain mines and acquiring land rights to build and operate hydroelectric facilities.
When the case was closed, AT&T agreed to be broken down into seven different companies that would each be responsible for serving a different region of the country. As time passed, five of these companies merged into AT&T, while the other two became Verizon and Qwest.
Kodak
Kodak was once one of the biggest names in the camera and film business. At some point in time, Kodak had a 96% share of the market in the United States. This obviously prompted antitrust lawsuits from several parties, private and federal. However, perhaps the most significant of these cases was brought forth by the US government in 1921. The result was a consent decree that basically said that Kodak would only sell its own film and not retain a monopoly on all film produced for either photography and film.
A similar lawsuit arose after Kodak developed colored film. The antitrust case was again brought up by the US government which saw that since Kodak was the only manufacturer of colored film, and the only company that knew how to process it, it had become a monopoly. They would charge other companies a fee to process colored film as well as a fee to deliver it back to them. The result was a deal that allowed other companies to license colored film from the company. These decrees remained in effect until 1994 when they were terminated by a court due to a shift in economic conditions in the US.
Standard Oil
The United States’ government filed a case against Standard Oil due to alleged antitrust violations under the Sherman Act. The Supreme Court application of the Sherman Act in this case set a precedent for most other antitrust cases in the future. In fact, it is argued that this case helped contribute to the creation of the Clayton Anti-Trust Act. Legal experts believe that the Clayton Act is a much more comprehensive and improved version of the Sherman Act.
This particular case had a huge impact on the oil industry in America. It broke up Standard Oil into 34 more companies that became competitors. One of the companies that broke away eventually became ExxonMobil.
Microsoft
This is perhaps the most famous of the antitrust cases on this list. According to the US government, Microsoft had committed violations of the first two sections of the Sherman Act. The case hinged on the issue of a monopoly in Operating System and Browser sales for Intel Chip based personal computers. Microsoft had begun to bundle its Operating System, Windows, with the browser, Internet Explorer, basically eliminating the need for other browsers and pricing them out of the market. Bundling them together is alleged to have been responsible for Microsoft’s victory in the first browser wars.
Judge Thomas Penfield Jackson of the Department of Justice issued his findings in the month of November, 1999. In his legal opinion, Microsoft had a monopoly on PC Operating Systems and had tried to ensure that it retained it through various tactics.