Legal Definitions - monopolization

Monopolization refers to the act or process of gaining or maintaining a monopoly through illegal means. In simple terms, a monopoly exists when one company has such dominant control over a particular market that it can effectively set prices and prevent new competitors from entering.

Under federal antitrust law, illegal monopolization is not merely about being a large or successful company. For a company's actions to be considered illegal monopolization, two main conditions must typically be met:

• Possession of Monopoly Power: The company must have significant control over a specific market, allowing it to dictate prices and largely exclude other businesses.
• Willful Acquisition or Maintenance: This power must have been gained or kept through deliberate, anticompetitive actions, rather than simply by offering a superior product, being exceptionally innovative, or benefiting from unforeseen circumstances. It's about actively stifling competition.

There is also a related concept called attempted monopolization, which occurs when a company tries to achieve a monopoly through anticompetitive behavior, even if it hasn't fully succeeded yet. To prove attempted monopolization, authorities typically look for:

• A clear intention to control prices or eliminate competition.
• Specific actions taken to achieve this goal (often referred to as predatory or anticompetitive conduct).
• A realistic chance that these actions could have led to a monopoly.

Examples of Monopolization:

• Example 1: Dominant Tech Platform

  A major technology company that operates a widely used mobile operating system also develops a popular app store. This company then creates its own suite of productivity apps (word processing, spreadsheets) and pre-installs them on all devices running its operating system, making them difficult to uninstall. Furthermore, it imposes restrictive rules on third-party app developers, making it challenging for competing productivity apps to gain visibility or functionality comparable to its own offerings. This effectively prevents other software companies from competing fairly in the productivity app market.

  How this illustrates monopolization: The tech company possesses monopoly power through its control of the mobile operating system. Its actions—pre-installing its own apps and imposing restrictive rules on competitors—demonstrate the willful acquisition and maintenance of that power, not through superior product alone, but by leveraging its existing market dominance to exclude rivals.

• Example 2: Predatory Pricing in a Niche Market

  A large, diversified retail corporation decides to enter the market for specialized artisanal coffee beans, a niche currently served by several small, independent roasters. The corporation begins selling its own brand of artisanal beans at prices significantly below its production cost for an extended period, specifically in regions where the independent roasters are most prominent. Internal documents reveal the corporation's strategy is to "eliminate local competition" before gradually raising prices once the smaller businesses are forced to close.

  How this illustrates attempted monopolization: This scenario demonstrates attempted monopolization. The large corporation shows a specific intent to destroy competition ("eliminate local competition"). Its predatory pricing (selling below cost) is the anticompetitive conduct. Given the corporation's vast financial resources, there is a "dangerous probability of success" that it could drive the smaller roasters out of business and eventually achieve a monopoly in that specific coffee bean market.

• Example 3: Control of Essential Infrastructure

  In a remote mining region, a single company owns the only railway line connecting the mines to the national transportation network. This railway is essential for transporting mined ore to processing plants and markets. The company, which also operates its own mining operations, charges exorbitant and non-negotiable fees for other independent mining companies to use its railway, making it economically unfeasible for them to compete. It also frequently delays their shipments, giving priority to its own ore.

  How this illustrates monopolization: Here, the company possesses monopoly power because it controls an essential piece of infrastructure (the only railway) that competitors cannot reasonably replicate. Its actions—charging excessive fees and prioritizing its own shipments—represent the willful maintenance of that power, not through efficiency, but by leveraging its control over a critical resource to disadvantage and exclude competitors in the mining industry.