Published online by Cambridge University Press: 12 November 2009
The preceding chapters have all dealt with concerted action. In this chapter, I shift the focus to unilateral conduct, specifically the offense of monopolization, governed by Section 2 of the Sherman Act. This chapter describes the development of Section 2 doctrine and examines modern theories of monopolization.
DEVELOPMENT OF SECTION 2 DOCTRINE
Standard Oil Co. v. United States is cited largely for its statement of the rule of reason as the test that courts should apply in Sherman Act cases. Standard Oil of New Jersey controlled 80 percent or more of all refining capacity in the United States during the thirty years prior to its dissolution in 1911. It has been said that the company achieved its position through oppressive tactics including bribery of public officials, exclusive dealing, harassing lawsuits, and price cutting in order to eliminate small rivals. The circuit court ordered the company to rearrange itself into thirty-three independent companies, and the Supreme Court upheld the decree with only minor changes.
The issue before the Supreme Court was whether the acts Standard Oil used to gain monopoly power were illegal per se, or illegal only if unreasonable. The Court held that Section 2 condemned monopoly power when it was abused, or used unreasonably, as evidenced by trade practices that would violate Section 1 if carried out by two or more firms in combination. I will refer to this below as the abuse theory of monopolization.