One of the more important antitrust cases of the twentieth century involved the Aluminum Company of America (Alcoa) in \(1945 .\) At that time, Alcoa controlled about 90 percent of primary aluminum production in the United States, and the company had been accused of monopolizing the aluminum market. In its defense, Alcoa argued that although it indeed controlled a large fraction of the primary market, secondary aluminum (i.e., aluminum produced from the recycling of scrap) accounted for roughly 30 percent of the total supply of aluminum and that many competitive firms were engaged in recycling. Therefore, Alcoa argued, it did not have much monopoly power. a. Provide a clear argument in favor of Alcoa's position. b. Provide a clear argument against Alcoa's position. c. The 1945 decision by Judge Learned Hand has been called "one of the most celebrated judicial opinions of our time." Do you know what Judge Hand's ruling was?

Step by step solution

01

Argument in Favor of Alcoa's Position

Alcoa claimed that while they controlled a large portion of primary aluminum production, secondary aluminum, produced from the recycling of scrap (which contributes to roughly 30 percent of the total supply) had multiple competitive players. This diversification in the source of aluminum supply reduces Alcoa's monopoly power in the market.

02

Argument Against Alcoa's Position

On the other side, one may argue that despite the existence of secondary aluminum, Alcoa held a significant monopoly in the primary aluminum production (90 percent), thus controlling a major share of total supply. This control could allow it to influence market prices, demonstrating substantial monopoly power despite the existence of a secondary market.

03

Researching Judge Learned Hand's Ruling

The final step requires a bit of research as it refers to a factual historical event. In the ruling, Judge Learned Hand found Alcoa guilty of monopolizing the aluminum market. He stated that the size of a company doesn't determine its guilt; however, a concern arises when a company, through intention or not, reduces competition.

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