ANTITRUST CLAIMS

Antitrust Claims Maria Carrillo BUS670: Legal Environment Instructor: Troy Tureau

October 17, 2011

ANTITRUST CLAIMS Antitrust Claims

There is many point of view about the Antitrust laws and its applications. According to Mallor, Barnes, Bowers, and Langvardt (2010) the traditional antitrust focus on the structure of the industry and this protects competitors instead of competition. The Chicago School theorist focus on anti-conspiracy efforts rather than anti-concentration efforts (p. 1255); now a days, a very high percentage of the judges elected and appointed in our courts believe on the Chicago School theorist. Antitrust laws protect competition, which is said to benefit consumers with better products at lower prices. The U.S. Department of Justice and attorney generals from 20 states filed antitrust lawsuits against Microsoft Corporation, the world's largest supplier of computer software for personal computers in the United States. Microsoft was accused of allegedly violating sections 1 and 2 of The Sherman Antitrust Act of 1890. Section 1 of the Sherman Act outlaws every contract, combination, or conspiracy, in restraint of trade." The Supreme Court has since then decided that the Sherman Act prohibits only those contracts or agreements that restrain trade unreasonably. Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not necessarily illegal for a company to have a monopoly or to try to achieve a monopoly

ANTITRUST CLAIMS position. The law is violated only if the company tries to maintain or acquire a monopoly position through tactics that either unreasonably exclude firms from the market or significantly impair their ability to compete. The Department of Justice feels that Microsoft has a monopoly in the field of personal computer operating systems and that they are engaging in anti-competitive conduct. Microsoft's operating systems are used in over 80% of PCs. More than 90% of new PCs are shipped with a version of Windows perinstalled. According to the Department of Justice, "PC manufacturers have no commercially reasonable alternative to Microsoft operating systems for the PCs that they distribute." Other firms do exist in the operating system market for example, IBM, Oracle, Linux, etc. These firms may only have 10-20% of the market share for PC's operating systems but they do have some share of the market. This proves that Microsoft is not the only seller of operating systems as the Department of Justice claims. The Department of Justice's complaint that, "To protect its valuable Windows monopoly against potential competitive threats, and to extend its operating system monopoly into other software markets, Microsoft has engaged in a series of anti-competitive activities. Microsoft's conduct includes agreements tying other Microsoft software products to Microsoft's Windows operating system; exclusionary agreements precluding companies from distributing, promoting, buying, or using products of Microsoft's software competitors or potential competitor; and

ANTITRUST CLAIMS

exclusionary agreements restricting the right of companies to provide services or resources to Microsoft's software competitors or potential competitors." The Department of Justice claims Microsoft has engaged in predatory conduct by giving away its Internet Explorer browser. Predatory pricing is an exclusionary act by which a firm, in order to create or maintain a monopoly power, lowers its prices below the profit maximizing level in order to push rival firms out of the market or prevent them from ever entering the market. Once the competition has left the market, the companies can then raise prices to a competitive level and recoup the losses suffered by predatory pricing. This results in higher prices for the consumer. In conclusion, I believe that Microsoft did violate the antitrust laws but by the time someone tried to stop it, it was to late. Microsoft had become an overwhelming power across the world, and they where capable to take the hit and adjust to new things. People are to use to Microsoft and the only thing that could slow it down is Apple.

ANTITRUST CLAIMS Reference

Mallor, J.P., Barnes, A.J., Bowers, T., & Langvardt, A.W. (2010). Business Law: The ethical, global,and ecommerce environment (14th ed.). New York : Irwin/McGraw Hill. T. A. Hemphill. (2004). Antitrust, Dynamic Competition, and Business Retrieved

Ethics. Journal of Business Ethics, 50(2), 127.

October 19, 2011, from ABI/INFORM Global. (Document ID: 707255991).