

Once upon a time, there was a phone company—or rather, phone company. AT&T Corp., the venerable “Ma Bell,” provided nearly all telephone service to nearly all Americans for decades… until it didn’t. The company infamously broke up on New Year’s Day in 1984, splitting into the seven “Baby Bells,” regional carriers that could compete with other long-distance providers for consumer dollars.




Antitrust 101: More than monopolies


The Sherman Act of 1890 was short and sweet, as far as laws go. It declared contracts, corporate trusts, or conspiracies “in the restraint of trade or commerce” between states or nations to be illegal. The Act also outlawed monopolies: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.”

Most of the juicy stuff in modern antitrust, however, comes from the 20th century. The Federal Trade Commission Act of 1914 established the FTC, with the explicit mandate not only to protect consumers from “unfair or deceptive” acts, but also to “prevent unfair methods of competition” that affect commerce. Those “unfair methods” were outlined in a companion piece of law: the Clayton Antitrust Act, also signed into law in 1914, which significantly refined and strengthened the Sherman Act.


The first is growth through acquisition: you can’t just buy out your primary competitor if the field isn’t big enough for other companies to pose real competition. Consider the mobile market, for example: regulators decided the imminent union of Sprint and T-Mobile isn’t anticompetitive, because T-Mobile and Sprint are the two smallest of the four major players. Even with one of them taken out, the market still has three national carriers. (And under the agreement with regulators, there will theoretically be a fourth carrier again. Someday.)



Unfair behavior can also include a whole array of tactics undertaken by a single company, such as price discrimination, predatory pricing, or certain kinds of exclusivity requirements. These are the kinds of behaviors a federal judge found Qualcomm guilty of back in May, when she ruled that the company’s business practices “strangled competition” with exclusive deals and patent licensing fees that charged device makers even when their products used a different brand of chip.


So who’s investigating whom?



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