Antitrust , Monopoly and Oligopoly

Introduction Prior to the United States Civil War the market was limited. After the war the market opened up into a more competitive market due to increased transportation and production abilities. Some large companies emerged leading to a monopoly market structure in which “one firm is the sole seller of a product or service” (McConnell, Brue, Flynn, 2012, p.164). When a monopoly market exists, companies have control over several key factors such as price, production, and distribution. A monopoly market creates high and difficult barriers for entry, preventing other companies from entering the market. Monopolistic companies “tend to produce less output and charge higher prices” (McConnell, Brue, Flynn, 2012, p. 375). To keep the market in competition, the United States government developed Antitrust Laws. What this law provide is a means of prevention of “monopolization, promote competition, and achieve allocated efficiency” (McConnell, Brue, Flynn, 2012, p.375). These Antitrust Laws are still being exercised today and one such example is Dean Foods.

Antitrust The United States has Antitrust Division (DOJ) that monitors companies. In 2010, the DOJ brought suit against Dean Foods Company for violation of antitrust laws. Dean Food Company was in the process of acquiring Consumer Product Division of Foremost Farms USA. The suit alleged that this was a violation of the Clayton Act, an act that “sought to outlaw techniques that firms might use to develop monopoly power” (McConnell, Brue, Flynn, 2012, p. 376). The suit claimed that by Dean Foods acquiring Foremost Farms, “such acquisition may be substantially to lessen competition. Several other civil litigations ensued such the case against Dean Foods and Dairy Farmers of America alleged. The lawsuit Allen v. Dairy Farmers of America, Inc. (DFA), which included Dean Foods