Question

The essay question concerns judicial interpretation of the Sherman Act, section 2 from the early days through the Grinnell case. How is the problem of “market definition” relevant in section 2 cases? Is monopolization illegal per se? Be prepared to explain the change in approach in the Alcoa case from the early days or “era of leniency” with respect to the types of evidence necessary to establish “evident purpose” or “intent to monopolize.” Also, according to the standards set in the Grinnell decision, when is the structural condition of monopoly “safe” from section 2 prosecution?

Answer 1

To answer this question let us first understand the Sherman Act Section 2. Section 2 of the Sherman Act makes it unlawful for any person to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations.

Section 2 establishes three offenses, commonly termed "monopolization," "attempted monopolization," and "conspiracy to monopolize." Although this report and most of the legal and economic debate focus specifically on the two forms of monopolization--monopoly acquisition and monopoly maintenance much of the discussion applies to the attempt offense as well.

The definition of market states that it is a place that facilitates the exchange of goods and services between two individuals, the definition basically states that market is a place where perfect competition exists and one buyer or seller cannot influence the overall market, in short it’s a price taker and not price maker. Thus section 2 of the Sherman Act deals with monopolization and monopoly disrupts the entire market system, thus affecting the essence of market which is perfect competition.

Monopoly if it exists on the basis of innovation and copyright it should not be considered as illegal but if it is acquired by some fraudulent and illegal means it disrupts the entire market, therefore as the section 2 of Sherman act specifies monopolization should be dealt with strictly and should not be allowed to disrupt the perfectly competitive market.