What Are Monopolies

What Are Monopolies

What Are Monopolies

What Are Monopolies

A monopoly
may be defined as one entity being the sole supplier of a particular product or
service, thus leaving no room for others to partake in such business
enterprises. This lack of competition, then, leaves little choice for
consumers, which places constraints of the economy as a whole. Due to the
advent of monopolies, “competition laws” have been instituted, which
are also known as “antitrust laws”. They are set forth so as to
ensure that competition be existent within every market of the economy and place
regulations on monopolies.

The Sherman Antitrust Act was one of the first Federal
statutes to place limitations upon monopolies. Its main purpose was to prevent
companies from garnering power as monopolies. It is employed to protect the
consumers as opposed to the companies, as such practices involving monopolies
are deemed “failures of the market”. This Act required that the Government
be responsible for policing the activity of trusts, companies, and
organizations of the like if they are deemed in violation of the statute.

The basis by
which antitrust law is composed comprises of 3 important aspects. These include
the following: prohibition of practices that may impose limitations upon
“free trading” as well as overall market competition, barring companies
from behavior that may lead to market domination or other
“anti-competitive” customs, and the overseeing of “mergers and
acquisitions,” which entails the dealings between firms of business.

An example
of a Supreme Court case with this in mind was that of Standard Oil Co. of New Jersey
v. United States
. This was a case in which the Court ruled that Standard
Oil had actually been guilty of imposing a monopoly upon the entire petroleum
industry. In order to provide a solution to such a monopoly, Standard Oil was
ordered to divide itself into various firms in order to ensure increased

Another significant Supreme Court case was that of
the United States v. Microsoft. This encompassed a number of previous civil
suits filed against the technological juggernaut. The claims set forth in this
case accused Microsoft of monopolizing the region of personal computer sales
due its dealings with “operating system as well as web browser sales”.
The main issue was the legality for which Microsoft may combine its Internet Explorer
browser with its Windows operating system. This was asserted as the reasoning
behind Microsoft’s monopoly over this market as consumers had access to a
browser upon purchase of the Microsoft’s Windows operating system.

In a final
settlement, Microsoft was ordered to share their software interfaces with other
companies for a period of at least 5 years in order to ensure fairness. They
did not, however, need to change any of their bundles, which caused the
commotion to begin with. This settlement led to the advent of other competitive
computer companies, which would allow consumers choices suitable for their
specific technological as well as financial needs.




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