HBD Movie

The Supreme Court recognized that section II of the Sherman act does not prohibit monopoly as such:

Although the statute by the comprehensiveness of the enumerations embodied in both the first and second sections makes it certain that its purpose was to prevent undue restraints of every kind or nature, nevertheless by the omission of any direct prohibition against monopoly in the concrete it indicates a consciousness that the freedom of the individual right to contract well not unduly or improperly exercised was the most efficient means for the prevention of monopoly, since the operation of the centrifugal and centripetal forces resulting from the right to freely contract was the means by which monopoly would be inevitable prevented if no extraneous or sovereign power imposed it and no right to make unlawful contracts having a monopolistic tendency were permitted.

In other words, section 2 of the Sherman act does not prohibit all monopoly, since monopoly can result from legal competition freedom to contract. Section 2 does prohibit monopoly that result from certain types of competition. Drawing on a review of both the common law concerning monopoly and the legislative history of the Sherman act, chief justice Edward D. white indicated the general standard used to decide whether or not a monopoly position had resulted from improper competition and thus violated section 2 of the Sherman act:

The criteria to be resorted to in any given case for the purpose of ascertaining whether violations of the section have been committed, is the rule of reason guided by the established law and by the plain duty to enforce the prohibitions of the act and thus the public policy which its restriction were obviously enacted to sub serve.

To elaborates this general standard of the rule of reason. White outlined the tests to be applied by lower courts in monopolization cases. A monopoly violates section 2

1. If obtained by contracts in restraint of trade that violate section 1 of the Sherman act.
2. If obtained not as a result of normal industrial development.
3. If obtained by actions showing an intent and purpose to exclude others.