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US antitrust law aims to preserve competition

By Reuters, 11/04/99

WASHINGTON - The antitrust law that the government wielded against Microsoft aims to protect against monopolists so consumers can enjoy the low prices and innovations that flow from competition.

Companies can legally build monopolies through luck and skill, but they cross the line if they use their power to muscle would-be rivals out of the marketplace or to extend their monopolies to new areas.

Judges who find companies have abused their dominant position have done everything from impose fines, to order changes in company practices, to the more extreme step of splitting a monopoly into multiple companies, as happened with cases ranging from AT&T Corp in 1982 to Standard Oil in 1911.

AT&T Corp. agreed to a consent decree with the government leading to the 1984 break-up of the company. The government said AT&T had monopolized the market for local and long-distance telephone service, along with equipment.

The Supreme Court broke up oil baron John D. Rockefeller's Standard Oil in 1911.

Once a judge finds a company holds monopoly power, that often opens the door to private lawsuits. Private plaintiffs can recover triple damages and legal fees, and need only show that the company illegally threw its weight around if the government has already won a judgment of monopoly power.

Government suits like the Microsoft case are relatively rare. More often, the Justice Department and Federal Trade Commission spend their time reviewing mergers to make certain they are pro-competitive.

Antitrust law has deep roots. Even before Congress enacted the Sherman antitrust law in 1890 in the face of industrial giants in the oil, steel and railroad industries, the country had a long history of anti-monopoly action dating back to colonial times.

Even earlier, in England in 1516, Sir Thomas More wrote in "The Utopia": "Suffer not these rich men to buy up all, to engross and forestall, and with their monopoly to keep the market alone as they please."



 


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