United States v. Alcoa

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United States v. Aluminum Co. of America is a key antitrust case decided by the U.S. Court of Appeals for the Second Circuit on March 12, 1945, with Judge Learned Hand writing the opinion. The case came from a 1937 Justice Department charge that Alcoa illegally monopolized the aluminum market under the Sherman Antitrust Act. A trial began in 1938, but the judge dismissed the case. The government appealed, and because the Supreme Court could not hear the case in 1944, Congress allowed the Second Circuit to decide it.

Alcoa argued that if it was a monopoly, it became one because of superior efficiency and competition, not through unlawful acts. The government contended that simply having the power to control prices and curb competition was illegal monopolization. Judge Hand held that the court could consider only the market for “virgin aluminum” when measuring Alcoa’s share, and that the relevant market should be defined narrowly as the prosecution urged. He treated certain practices as illegal per se, meaning it did not matter how the monopoly started; the offense was simply to be a monopoly. Hand also explained that while a monopoly might happen organically, that fact would not excuse conduct that effectively excludes rivals.

The case was remanded to determine an appropriate remedy. In 1947, Alcoa argued that two new entrants—Reynolds and Kaiser—had appeared after World War II due to demobilization and the government’s divestiture of defense plants, which the district court later used to resist divestiture. The court kept jurisdiction to monitor possible re-monopolization. By 1950, the domestic market remained Alcoa’s focus, while its Canadian subsidiary Alcan handled international markets, and Anaconda Aluminum joined the market. The aluminum monopoly began to decline after 1958 when Harvey Machine Tools started primary aluminum production.

In 1966, future Federal Reserve chairman Alan Greenspan criticized United States v. Alcoa, arguing that antitrust law should condemn only coercive monopolies, not efficient, competitive success. He suggested that punishing productive and efficient companies could do more harm than good.