Reference no: EM131601379

The Sherman Anti-Trust Act and the American view of monopolies needs to be examined in the study of white collar crime. However we must ask ourselves, is a monopoly a criminal act? How often do we view a monopoly, if ever, in the same way as we look upon a bank robbery for example?

Let us examine the actions of Standard Oil, which we all now know as Exxon Mobil, Sunoco, Texaco, and Chevron. At one time Standard Oil was the largest oil company in the United States. Standard Oil could charge whatever amount they wished for oil and gasoline, withhold selling oil and gas where they wanted, or flood the market with cheap oil and gas to put out of business any competition that may arise. In the name of free market capitalism Standard Oil did as they pleased, purchasing or putting out of business the competition, thus creating a monopoly. It was only by the action of the U.S. Supreme Court that Standard Oil was broken into several smaller companies.

Another example is AT&T. Here was a company that prior to 1984 was the only long distance telephone company in the United States. For those of you old enough to remember the world of telephone prior to 1984, there was only one telephone company to service all of your telephone needs. Prices were high especially for long distance service and new products were virtually nil. If you had a problem with your phone service there was nowhere else to go. Today, companies compete with new services and products, or you can use internet based phone service, satellite phone service, etc.
Whenever a monopoly exists there is no competition. What are the effects of a lack of competition? The answers range from shoddy workmanship, to a limited range of products, lack of innovation, high prices, poor service, etc.

Can you remember a time before satellite television, DVD rentals, IPTV, and internet downloading of videos? If you wanted cable television the cable company would tell you that they'll be at you house sometime on a Thursday three weeks from now and you would be forced to take the entire day off from work and wait for someone to arrive. Now due to competition cable television providers often guarantee to be at your home at a specified time, offer discounts on services, and use incentives to lure customers away from other means of entertainment. This has happened because of the competition in the marketplace.

So is there a time when a monopoly is better than competition? How about water service? Municipal customers are forced to purchase their water from only one source without any competition? What about natural gas?

However let us briefly discuss the electric industry. For those students in Connecticut, the State deregulated the monopoly held by Northeast Utilities on providing electricity to Connecticut residents. The thought was that if there was competition in the electric generation market, then electric prices would decline. What has happened has been just the opposite. The prices of electricity have increased substantially, as a lack of electricity producers have entered the market place.

So the question arises, what if no service provider wants to enter the marketplace due to the high barriers of production or service offering? Is it always bad to allow monopolies? Had the State of Connecticut continued to allow Northeast Utilities a monopoly on electric service, would prices still have risen so much?

In sum, are monopolies simply a component of free market capitalism, or are they equal to a criminal enterprise?

Before answering that question, let us turn our attention to another form of monopoly. For years, organized crime in large cities such as New York City had control of linen, liquor delivery, refuse collection, vending machines and seafood. If a person wanted to open a restaurant, they had to use a certain refuse collector to pick-up their trash, if they wanted table cloths and napkins they had to use a certain linen service, if they wanted to have a cigarette machine or beer in their bar they had to use a certain service. This artificial monopoly was the result of organized crime's extortion of legitimate businesses. This monopoly allowed organized crime to not only have a guaranteed market for their services, it also allowed them to charge whatever prices they wished. If someone refused to pay the high prices, then they would receive no service and have nowhere else to go because organized crime controlled all such business and one linen service for example, would not cross into another linen service's area or neighborhood.