Anti-Trust

Vindicating Standard Oil - 100 Years Later
Sherman Anti-Trust Act

• According the the article, as Standard Oil's market share increased, the price per gallon of kerosene decreased. 
• Lower costs were the reason Rockefeller's market share expanded so rapidly. 
• Rockefeller adopted efficient business practices such as vertical integration and economies of scale. 
• Received discounted rail fares because he could offer a reliable, efficiently packaged and deliverable product for the railroads. (Provided the R&R company with an intrinsic value). 
• When he attempted to bring stifle output in order to raise prices, the refineries were competed and put out of business. 
• I would like to see how the price of kerosene reacted after the break-up occurred. 
• Before the break-up, Standard Oil's market share began to erode as his competitors embraced his efficient business model. 
• Rockefeller's innovations forced the industry as a whole to become more efficient and modern. 
• The purpose of the Sherman Anti-Trust Act was to oppose the combination of entities that could potentially harm competition, such as monopolies or cartels. 
• The purpose explained by the U.S. Supreme Court:
• ...not to protect businesses from the working of the market; it is to protect the public from the failure of the market. 
• the law directs itself against conduct which unfairly tends to destroy competition itself. 
• The focus of U.S. competition law is on the protection of competition rather than the protection of competitors. 
• The Clayton Antitrust Act, passed in 1914, proscribed activities to be "harmful" to the public:
• Price discrimination between different purchasers, if such discrimination tends to create a monopoly. 
• exclusive dealing agreements
• mergers and acquisitions that substantially reduce market competition. 
• Created certain exceptions for labor union activities. 
• Constitutional authority is derived from the authority to regulate interstate commerce. 
• Elements of violation (Section 1):
• An Agreement
• Which unreasonable restrains competition
• Which affects interstate commerce
• Elements of violation (Section 2):
• Possession of monopoly power in the relevant market
• the willful acquisition or maintenance of that power as distinguishing from growth or development as a consequence of a superior product, business acumen, or historic accident. 
• The courts have drawn a distinction between coercive and innocent monopolies.  The act is not meant to punish businesses that come to dominate their market passively or on their own merit, only those that intentionally dominate the market through misconduct, which generally consists of conspiratorial conduct. 

My Opinion

1. Efficiency and innovation lead to lower costs.
2. Lower costs will lead to lower prices in a competitive marketplace. 
3. Lower prices benefit consumers and producers:
1. Greater profit is a result of greater market share and higher volume of sales. 
2. Consumers receive the same product for a lower cost. 
4. The cornerstone of this idea is preservation of a competitive marketplace. 
1. Without competition, efficiency and innovation are not rewarded. 
2. Lower costs will not lead to lower prices. 
3. Producers benefit at the expense of consumers in a non-competitive market.
5. Need to define: 
1. Competitive marketplace
2. coercive monopoly
3. Misconduct
6. The Sherman Anti-Trust Act is good in that it's purpose is to limit anti-competitive practices and attempts to distinguish between corrupt actions and companies who just do something better. 
7. The Clayton Anti-Trust Act appears to be overreaching in that it restricts particular business practices that may or may not be harmful.