Tarring the Trust: The Political Economy of Standard Oil
Postscript (Response) by Michael Reksulak & William F. Shughart II
It has been well established in the economics literature that the antitrust laws have been used strategically to undermine the competitive market process, whether the alleged abuses were based in fact or not. It should, then, come as no surprise that the origins of one of the most famous decisions in antitrust jurisprudence, the 1911 judgment by the Supreme Court against Standard Oil, can be traced back to an alliance of rivals that had seen their business interests hurt by John D. Rockefeller, Sr.’s innovative entrepreneurship. In fact, the judgment seemed to confirm early fears attributed to “[m]ost economists in the late 19th century . . . [that] the law would impede attainment of superior efficiency promised by new forms of industrial organization.” Others concluded later that “the enforcement of the Sherman Act over the past 95 years has probably reduced industrial competitiveness.”
On that occasion more than a century ago–an event that has been called “the mother of all monopolization cases”–the Court decided unanimously (with Justice Harlan concurring in part and dissenting in part ) that the U.S. government had the right to impose “broader and more controlling remedies,” including the dissolution of an entire corporate entity, in announcing that they henceforth would apply a “rule of reason” in evaluating alleged antitrust law violations.
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