Chapter III. Monopoly Power

• Pages: 55-84

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CHAPTER III

MONOPOLY POWER

Whereas Chapter II discussed the concept of monopoly power from

the standpoint of economics, Chapter III examines how courts have

defined and detected monopoly power. Chapter III begins with a

discussion of the related concepts of market power and monopoly power.

It then examines the approaches courts have established for identifying

the existence of monopoly power, focusing on relevant market definition

and related issues. Finally, Chapter III concludes with a discussion of

monopsony power.

A. Market Power and Monopoly Power

“Monopoly power” is an essential element in analyzing claims

brought under Section 2 of the Sherman Act.1Thecourtshavedefined

monopoly power as “the power to control prices or exclude

competition.”2This term is often equated with a high degree of market

power, as understood in economics.3

1. See Chapters IV and VI for a discussion of monopoly power as an

essential element of the § 2 offenses of monopolization and attempt to

monopolize, respectively.

2. United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391

(1956); see also ABA SECTION OF ANTITRUST LAW,ANTITRUST LAW

DEVELOPMENTS 225-26 (6th ed. 2007) [hereinafter ALD6] (collecting

cases).

3. See Chapter II.A.2 for a discussion of the economic concept of monopoly

power; see also Bacchus Indus. v. Arvin Indus., 939 F.2d 887, 894 (10th

Cir. 1991) (“Monopoly power is also commonly thought of as substantial

market power.”); Reazin v. Blue Cross & Blue Shield of Kan., Inc., 899

F.2d 951, 967 (10th Cir. 1990) (“Market and monopoly power only differ

in degree-monopoly power is commonly thought of as ‘substantial’

market power.”); Deauville Corp. v. Federated Dep’t Stores, 756 F.2d

1183, 1193 (5th Cir. 1985) (referring to monopoly power as an “extreme

degree of market power”); U.S. Dep’t of Justice, Antitrust Division,

Competition and Monopoly: Single-Firm Conduct Under Section 2 of the

56 Monopolization and Dominance Handbook

1. The Element of Monopoly Power Under Section 2

Section 2 establishes liability for three types of antitrust violations:

monopolization, attempts to monopolize, and conspiracies or

combinations to monopolize.4The element of monopoly power in each

of these Section 2 offenses is discussed below.

a. Monopolization

To establish a monopolization claim, a plaintiff must show “the

possession of monopoly power in the relevant market . . . accompanied

by an element of anticompetitive conduct.”5In other words, a defendant

must possess monopoly power and must have acquired or maintained

that power through anticompetitive means.

b. Attempt to Monopolize

Monopoly power also plays a significant role in claims brought

under the attempted monopolization prong of Section 2. Attempted

monopolization requires a showing of three elements: “(1) that the

defendant has engaged in predatory or anticompetitive conduct with (2) a

Sherman Act 2 (Sept. 2008) [hereinafter Withdrawn Antitrust Division

Report] (“[M]onopoly power requires, at minimum, a substantial degree

of market power.”); ABA SECTION OF ANTITRUST LAW,MARKET POWER

HANDBOOK 5 (2005) [hereinafter MARKET POWER HANDBOOK](“[F]irms

with substantial amount of market power may be said to have monopoly

power....”);WilliamM.Landes&RichardA.Posner,Market Power in

Antitrust Cases,94H

ARV.L.REV. 937, 939 (1981) (noting that monopoly

power requires “a high degree of market power”).

4. 15 U.S.C. § 2 (“Every person who shall monopolize, or attempt to

monopolize, or combine or conspire with any other person or persons, to

monopolize any part of the trade or commerce among the several states,

orwithforeignnations,shallbedeemedguiltyofafelony....”).

5. Verizon Commc’ns v. Law Offices of Curtis V. Trinko, 540 U.S. 398,

407 (2004) (citing United States v. Grinnell Corp., 384 U.S. 563, 570-71

(1966)). Courts have also required some causal connection between the

alleged anticompetitive conduct and the antitrust injury. See, e.g., Austin

v. McNamara, 979 F.2d 728, 739 (9th Cir. 1992) (noting plaintiff must

prove “defendants’ (1) possession of monopoly power in a relevant

market; (2) willful acquisition or maintenance (‘use’) of that power; and

(3) causal antitrust injury.”) (internal quotations omitted).