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Dominant Firm Conduct: Lessons from Early Antitrust Enforcement
Wallace P. Mullin, George Washington University
DOJ/FTC Hearings on Single Firm Conduct and Antitrust Law
- First dominant firms arose out of Trust movement and merger to monopoly
- Comparative case studies on
- Standard Oil
- U.S. Steel
- American Sugar Refining Corporation
- Lessons on dominant firm behavior and effect of antitrust prosecution and remedy.
- An aggressive competitor.
- Supreme Court found Standard Oil guilty, ordered dissolution.
- Comanorand Scherer (1995) argue that dissolution improved long term industry performance.
- Dissolution of formerly independent entities aided success of remedy, Kovacic(1999).
United States Steel
- U.S. Steel a price umbrella for fringe firms, gradually lost market share
- Supreme Court found in favor of U.S. Steel.
- Dissolution would have lowered steel prices, Mullin, Mullin, and Mullin, 1995.
- US Steel’s acquisition by long term lease of Hill iron ore properties viewed as anti-competitive by contemporary antitrust authorities.
U.S. Steel Enforcement Lessons
- Antitrust law protects competition, not competitors.
- Supreme Court’s 1920 acquittal seemed influenced by competitor praise.
- New contractual arrangements may have efficiency motivations.
- Hill ore lease best explained as efficiency enhancing rather than vertical foreclosure, Mullin and Mullin, 1997.
American Sugar Refining Corporation
- Profitably engaged in predatory pricing, Genesoveand Mullin, 2006
- Department of Justice prosecution resulted in a consent decree
- Antitrust serves as a deterrent
- Government victories in American Tobacco and Standard Oil cases helped induce partial “voluntary” divestiture.