Landmark Antitrust Cases

Why This Matters

Antitrust law sits at the heart of American capitalism's central tension: when does business success become market abuse? These cases aren't just legal history—they're the battlegrounds where courts defined what "competition" actually means and how far government can go to preserve it. You'll see the same debates resurface across eras: What counts as a monopoly? Does size alone equal guilt? How do you regulate industries that didn't exist when the laws were written?

When you study these cases, you're really studying the evolution of market definition, the rule of reason doctrine, vertical vs. horizontal restraints, and regulatory adaptation to new technologies. The AP exam loves asking how government intervention shaped specific industries and why certain eras saw more aggressive enforcement than others. Don't just memorize case names and dates—know what legal principle each case established and how courts' thinking about monopoly power changed over time.

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Trust-Busting Foundations: The Progressive Era Breakups

The Sherman Antitrust Act of 1890 sat largely dormant until Theodore Roosevelt's administration decided to actually use it. These early cases established that the federal government could and would dismantle private corporations that restrained trade—a radical proposition at the time.

Northern Securities Co. v. United States (1904)

• First major trust-busting victory—the Supreme Court dissolved J.P. Morgan's railroad holding company, proving the Sherman Act had real teeth
• Railroad consolidation threatened to give a single entity control over transportation across the entire Northwest, affecting farmers and shippers alike
• Political significance made Roosevelt's reputation as a "trustbuster" and signaled that even the most powerful financiers weren't above federal law

Standard Oil Co. of New Jersey v. United States (1911)

• Breakup into 34 companies—the most dramatic corporate dissolution in American history, reshaping the entire petroleum industry overnight
• Rule of reason doctrine established here, meaning courts would evaluate whether restraints were unreasonable rather than banning all combinations automatically
• Vertical integration was the weapon: Rockefeller controlled drilling, refining, pipelines, and distribution, squeezing out competitors at every level

United States v. American Tobacco Company (1911)

• Dissolved into several competing firms—applied the same logic as Standard Oil to another industry dominated by a single trust
• Pattern of predatory behavior included buying competitors only to shut them down, proving intent to monopolize rather than simply achieving market success
• Rule of reason reinforced—together with Standard Oil, these twin 1911 decisions created the framework courts would use for decades

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Market Power Without Predation: The Alcoa Doctrine

By mid-century, courts grappled with a harder question: what if a company dominates its market through efficiency rather than dirty tricks? The answer reshaped how we think about monopoly itself.

United States v. Alcoa (1945)

• Market share alone could equal monopolization—Judge Learned Hand ruled that controlling 90% of aluminum production was illegal even without predatory conduct
• "Thrust upon" defense rejected—Alcoa claimed its dominance was simply the result of superior skill and foresight, but the court said actively maintaining monopoly power was itself the violation
• Structural remedy approach meant focusing on market outcomes rather than just punishing bad behavior, influencing antitrust thinking for decades

United States v. E. I. du Pont de Nemours & Co. (1956)

• Market definition became central—the Supreme Court asked whether cellophane competed with other wrapping materials, not just other cellophane producers
• "Reasonable interchangeability" test meant du Pont's 75% share of cellophane was actually a small share of the broader flexible packaging market
• Victory for defendants showed that how you draw market boundaries often determines who wins—a lesson tech companies would later exploit

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Regulated Industries: Utilities and Natural Monopolies

Some industries seemed to require monopoly—running competing phone lines to every house made no sense. But regulated monopoly created its own problems when technology changed and competition became possible.

United States v. AT&T (1982)

• Breakup into seven "Baby Bells"—ended AT&T's century-long control of American telecommunications and created regional phone companies
• Consent decree rather than court ruling meant AT&T negotiated its own dissolution, keeping its long-distance and equipment businesses while divesting local service
• Deregulation philosophy reflected the Reagan era's belief that competition, not regulation, would best serve consumers in telecommunications

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Technology Sector: New Markets, Old Questions

The digital revolution forced courts to apply century-old laws to industries that barely existed. How do you define markets when products are free? When do network effects become barriers to entry? These cases show antitrust law struggling to keep pace.

United States v. IBM (1969-1982)

• Thirteen-year case ultimately dropped—the government accused IBM of monopolizing mainframe computers but couldn't keep up with an industry transforming beneath its feet
• "Technological obsolescence" argument emerged as IBM's dominance eroded naturally through competition from minicomputers and eventually PCs
• Cautionary tale for regulators about pursuing cases in fast-moving industries where market conditions change faster than litigation

United States v. Microsoft Corporation (2001)

• Browser wars and bundling—Microsoft illegally maintained its Windows monopoly by tying Internet Explorer to the operating system and pressuring PC manufacturers
• Settlement rather than breakup—unlike Standard Oil, Microsoft remained intact but faced restrictions on exclusive contracts and had to share technical information with competitors
• Network effects central to the case: Windows' dominance came partly from the fact that software developers wrote for the dominant platform, creating a self-reinforcing cycle

United States v. Apple Inc. (2013)

• Price-fixing conspiracy with publishers—Apple orchestrated an agreement among e-book publishers to raise prices and break Amazon's $9.99$ pricing dominance
• "Hub and spoke" conspiracy meant Apple was the coordinator connecting competitors who couldn't legally agree directly with each other
• Agency model vs. wholesale model distinction mattered: Apple's approach let publishers set prices, undermining Amazon's discount strategy

FTC v. Qualcomm (2019-2020)

• Government lost—the Ninth Circuit ruled Qualcomm's licensing practices, however aggressive, didn't constitute antitrust violations
• "No license, no chips" policy meant device makers had to accept Qualcomm's patent terms to buy its processors, but the court found this was tough negotiating, not illegal tying
• Modern enforcement limits revealed: even practices that look anti-competitive may survive if courts apply demanding standards of proof

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Quick Reference Table

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Self-Check Questions

1. Which two Progressive Era cases (both decided in 1911) established the "rule of reason" doctrine, and how did this change antitrust enforcement from a strict prohibition approach?

2. Compare the outcomes in Alcoa (1945) and du Pont (1956)—why did high market share lead to liability in one case but not the other?

3. If an FRQ asked you to trace how antitrust enforcement adapted to new technologies, which three cases would you use and what would each demonstrate about the challenges regulators faced?

4. What distinguishes Microsoft's violation (monopoly maintenance) from Apple's violation (price-fixing conspiracy), and why does this distinction matter for understanding different types of antitrust harm?

5. Both Standard Oil (1911) and AT&T (1982) resulted in corporate breakups, but they reflected different eras of antitrust thinking. What philosophical shift about competition and regulation separates these two cases?