Does Antitrust Legislation Protect Competition or Competitors?
Many economists claim that the antitrust laws have often reduced competition by protecting smaller competitors from their larger rivals. In 1911, the Standard Oil Company was found guilty of violating the Sherman Act because it competed unfairly. A few years later, U.S. Steel was found not guilty because competitors had not been harmed by the giant steel company. U.S. Steel had been charging a high price, which encouraged other steel companies to expand. All steel producers profited by U.S. Steel’s actions, although consumers of steel paid higher prices than necessary. In 1945, the Aluminum Company of America (Alcoa) was found guilty of violating the Sherman Act because it sought to meet a growing demand with increased capacity and sought to take advantage of new opportunities. If Alcoa had merely charged a higher monopoly price and allowed other firms to enter and grow, it might have been found not guilty. The result of these cases was to encourage large firms to charge high prices ra
