Monopolizing and the Sherman Act

By Herbert Hovenkamp (University of Pennsylvania)

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 With one exception, however, the statute reads so broadly that criticisms of the nature that it is outdated cannot be based on faithful readings of the text.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 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 any of the many bills that address the issue of “self preferencing,” or dominant firm favoritism toward their own products. Adopting an abuse of dominance standard would require a brief 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.

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