Crandall Examines Microsoft Controversy in Terms of Sherman Act Case Law

In a forthcoming article, "The Failure of Structural Remedies in Sherman Act Cases," Robert W. Crandall examines the considerable controversy that has arisen around the recent U.S. district court decision that ordered vertical divestiture of Microsoft as a remedy for its violation of Section 2 of the Sherman Act. Crandall looks back over more than a century of Sherman Act case law to see how frequently structural relief has been imposed in monopolization cases that involve a single firm that has not attained its market position through merger or from conspiring with other firms. He concludes that there are only four or five such cases in the history of Sherman Act enforcement. He then examines intensively the effectiveness of structural relief--vertical or horizontal divestiture--in seven of the most important Section 2 cases and two others. He concludes that with one exception, the break up of AT&T in 1984, there is very little evidence that such relief is successful in increasing competition, raising industry output, and reducing prices to customers. The exception turns out to be a case of overkill because the same results could have been obtained through a simple regulatory rule, obviating the need for vertical divestiture of AT&T.