We finally have our first guest post on ICAB!! Judy Leeson has been a practicing lawyer for twelve years and also own the site www.lawdegree.net. Here she outlines and summarizes three of the most landmark judgements in U.S. anti-trust history. A detail discussion on them can also be found in the book The Master Switch by Timothy Wu. (A review of the book can be found on this blog itself.)

Standard Oil

Standard Oil was founded in 1870, when kerosene cost 30 cents per gallon. By 1897, the company had driven the price down to 6 cents a gallon, which put many of its competitors out of business. Although the trust was broken up in the state of Ohio in 1892, Standard simply separated the Ohio branch and kept control of the company.

A few years later, a law change in New Jersey allowed a company to hold shares in other companies, even those in other states. Thus, in 1899 Standard Oil Trust became a holding company based in New York which owned stock in Standard Oil of Ohio and 41 other companies – many of which owned stock in companies themselves. Standard Oil effectively became the largest company in the world.

In 1906, the U.S. government filed suit against Standard Oil for violating the Sherman Antitrust Act. The company was found guilty in 1909 and the decision was affirmed by the U.S. Supreme Court in 1911. Standard was forced to break up into 34 independent companies, some of which have since merged into the multinational corporation, ExxonMobil.

AT&T

AT&T was granted “natural monopoly” status by the U.S. government for many years in the first half of the 20^th century, but even after new competitors the market it was frequently challenged it as a monopoly. Finally in 1974, the U.S. Attorney General filed suit against the company for violating antitrust laws. The case took seven years before a settlement was reached to split the company into seven new companies, each serving a different region of the U.S. However, five of the seven have since merged to become AT&T Incorporated, which is now the 14^th largest company in the world.

Microsoft

In 1991 the FTC began to investigate whether Microsoft was abusing its monopoly on the market for PC operating systems. They closed the investigation in 1993 but the U.S. Department of Justice opened a new investigation later that year. In a 1994 settlement, Microsoft consented not to tie other Microsoft products to the sale of Windows but could still integrate new features into the operating system.

When Internet Explorer was introduced in 1995, Microsoft insisted that it was a feature rather than a new Windows product. The U.S. Department of Justice did not agree and filed suit against Microsoft for illegally discouraging competition to protect extend its software monopoly. In 2000, the court ordered Microsoft to break into two separate units, one for the operating system and another to produce software.

Following court appeals, a new settlement ordered less severe penalty that required Microsoft to share application programming interfaces with third-party companies. Nine states did not agree with the settlement, calling it a mere “slap on the wrist,” that was not severe enough.