Legal Definitions - monopoly leveraging

Monopoly Leveraging

Monopoly leveraging describes a situation where a company that holds significant market power, or a near-monopoly, in one particular market uses that existing dominance to unfairly gain a competitive advantage or stifle competition in a different, related market. This practice is generally prohibited under antitrust laws because it can harm fair competition and ultimately disadvantage consumers.

Here are a few examples to illustrate this concept:

• Example 1: Software Operating Systems and Cloud Storage

  Imagine a technology company that holds a near-monopoly on the operating system used by most personal computers worldwide. If this company then integrates its own new cloud storage service directly and exclusively into its operating system, making it the default and most convenient option, it could be seen as monopoly leveraging. By using its dominant position in the operating system market, it gains an unfair advantage in the separate cloud storage market, potentially making it difficult for competing cloud storage providers to attract users.

• Example 2: Telecommunications and Streaming Content

  Consider a telecommunications provider that is the sole provider of high-speed internet infrastructure in a specific geographic region, giving it a monopoly on internet access. If this provider then launches its own streaming video service and configures its network to prioritize its own content, ensuring it loads faster and buffers less for its internet subscribers compared to competing streaming services, this could be an instance of monopoly leveraging. The company would be using its monopoly in internet access to unfairly boost its position in the separate market for streaming video content.

• Example 3: Pharmaceutical Drugs and Diagnostic Tests

  Suppose a pharmaceutical company holds a patent monopoly on a life-saving drug for a rare disease. If this company then acquires a firm that produces the only diagnostic test for that same rare disease and begins to bundle the drug and the diagnostic test together, or makes it significantly harder for other diagnostic test providers to compete, it might be engaging in monopoly leveraging. It would be exploiting its dominance in the drug market to gain an unfair advantage or control over the separate market for diagnostic tests related to that disease.