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Interpretations and Developments
Since the Sherman Act, the Courts have been working out what constitutes
an unfair use of monopoly power. The Courts today believe that monopolies
in and of themselves are not harmful. However, they are in a unique
position to indulge in certain anti-competitive practices. One such
practice is the leveraging of monopoly power in one field to gain market
power in another field. An important case in working out the details
of monopoly leveraging was US v. Griffith in 1948. (334 U.S. 100)
United States v. Griffith ... states that a monopolist may not use
a monopoly in one field as leverage to gain a monopoly in another. The
Griffith case had to do with movie theaters. Griffith used its monopoly
status in small towns (where they owned the only theater) to get better
contracts from motion picture companies. If the company wanted their movie
to play in small towns, they were forced to agree to the contract terms
offered by Griffith. As a result, Griffith obtained movies for substantially
less than their competitors, which gave Griffith lower costs in monopoly
towns and competitive markets alike. What Griffith did was anti-competitive
because Griffith used monopoly power in small towns as a lever to gain
market share in competitive cities. ( The
Case Against Microsoft )
The details of what constitutes anti-competitive practices for a
monopoly were further worked out in US v. Grinnell Corporation as :
(1) the possession of monopoly power in the relevant market and (2)
the willful acquisition or
maintenance of that power as distinguished from growth or development
as the consequence of
a superior product, business acumen, or historic accident. ( The
Case Against Microsoft )
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