1. §2 Sherman
a. Monopolization and attempt to monopolize.
1. Define the relevant market (product and geographic);
2. Determine Market Share (80% generally consider monopoly share/power);
3. Monopolization conduct (Sherman §1 violation (restraint of trade), unlawful conduct, and strategic behavior (foregoing short-run profits for long-run benefits))
a. Anything that is not competition on the merits.
ii. Four Part test from Microsoft III:
1. Plaintiff must show anticompetitive conduct;
2. Plaintiff must show substantial affect on competition;
3. Defendant may show procompetitive justification;
4. Plaintiff may show that anticompetitive affect outweighs procompetitive benefit.
iii. Attempt to monopolize
1. Specific intent to obtain a monopoly that is illegal under §2.
a. Proof that the defendant was willing to use monopoly conduct.
i. Proof of an unlawful act is generally required to show this, although irrational behavior, see Loraine Journal, is usually sufficient.
b. Requires a violation of Sherman §1, torts, crimes, or irrational behavior.
2. Dangerous probability that defendant would have obtained the monopoly if allowed to carry on.
a. Means roughly 50% or more of the market.
2. §7 Clayton
a. Applies to all mergers (horizontal, vertical, and conglomerate)
i. Brown Shoe v. U.S. (1962)
1. Clayton §7 designed to stop to oligopoly, whereas Sherman §2 designed to stop monopoly.
2. Vertical integration, what does the Court look to?
a. Whether competitors of the supplier or buyer will be foreclosed from the market;
b. Whether there was a trend toward vertical integration/concentration in the market;
c. Whether there is an intent to foreclose competition;
d. Whether barriers to entry are erected that foreclose equal access.
3. Oligopolistic interdependence was a concern of the Warren Court.
a. All oligopolist must consider what the other parties will do to what level they set their price.
b. Lower prices do not lead to a higher market share, as all parties will lower price equally.
potential entry, high prices encourage entry.
ii. If two level entry is required, it must be onerous.
1. Must be a concentrated market (1800 HHI)
b. Horizontal Mergers
i. 1968 Horizontal Merger Guidelines:
1. Is there a concentrated market?
a. The top four are 75% or more then it is concentrated.
i. In this market the DOJ would challenge a merger between two firms that have at least 4% each.
b. The top four are less than 75% is not concentrated.
i. If the two firms have at least 5% then the DOJ would challenge.
2. Is there a trend towards concentration?
3. Philadelphia Bank (1963)
a. If the merger produces a firm with an “undue percentage share” and results in a significant increase in concentration in the market, it will be illegal.
4. General Dynamics Case (1972)
First time the Government lost.