(Market Power Example: Microsoft)
Author: Bagley, Constance E.
Source: Harvard Business School Publishing
Analyzes the 1991 decision of the U.S. Court of Appeals for the District of Columbia Circuit in the seminal New Economy antitrust case United States vs. Microsoft Corp., 253 F.3rd 34 (D.C. Cir. 2001), which arose out of Microsoft's efforts to promote Internet Explorer and to supplant Netscape's Navigator Internet Web browser as the leading browser. This case contains a detailed discussion of the application of the U.S. antitrust laws (Sections 1 and 2 of the Sherman Act, in particular) to technologically dynamic markets characterized by network effects. Issues addressed include: 1) the legality of exclusive dealing arrangements, 2) what constitutes illegal monopolization (including how courts define the relevant market and what constitutes anticompetitive conduct), 3) predatory pricing and the rules of impossibility, 4) the essential facilities doctrine, 5) the exercise of intellectual property rights (such as patents or copyrights) as a business justification, and 6) what constitutes an illegal attempt to monopolize. The U.S. Court of Appeals' decision is summarized, and extensive excerpts from the opinion appear as an exhibit.