Please answer as simply as possible. I KNOW when the work is not original. Thank you. Judge Learned Hand claims there would be no violation of the Sherman Act in any case where a company achieves mon

Uni ted States v. Aluminum Company of America

148 F.2d 416 (2d Cir. 1945)

JUDGE LEARNED HAND

It does not follow because “Alcoa” had such a monopoly that it “monopolized” the ingot market: it

may not have achieved monopoly; monopoly may have been thrust upon it. If it had been a

combination of existing smelters which united the whole industry and c ontrolled the production of

all aluminum ingot, it would certainly have “monopolized” the market.…We may start therefore with

the premise that to have combined ninety percent of the producers of ingot would have been to

“monopolize” the ingot market; and, so far as concerns the public interest, it can make no difference

whether an existing competition is put an end to, or whether prospective competition is prevented.…

Nevertheless, it is unquestionably true that from the very outset the courts have at least kept in

reserve the possibility that the origin of a monopoly may be critical in determining its legality; and

for this they had warrant in some of the congressional debates which accompanied the passage of the

Act.…This notion has usua1ly been expressed by saying that size does not determine guilt; that there

must be some “exclusion” of competitors; that the growth must be something else than “natural” or

“normal”; that there must be a “wrongful intent,” or some other specific intent; or that some

“unduly ” coercive means must be used. At times there has been emphasis upon the use of the active

verb, “monopolize,” as the judge noted in the case at bar.

A market may, for example, be so limited that it is impossible to produce at all and meet the cost of

prod uction except by a plant large enough to supply the whole demand. Or there may be changes in

taste or in cost which drive out all but one purveyor. A single producer may be the survivor out of a

group of active competitors, merely by virtue of his superior skill, foresight, and industry. In such

cases a strong argument can be made that, although the result may expose the public to the evils of

monopoly, the Act does not mean to condemn the resultant of those very forces which it is its prime object to foste r: finis opus coronal. The successful competitor, having been urged to compete, must

not be turned upon when he wins.

* * *

[As] Cardozo, J., in United States v. Swift & Co., 286 U.S. 106, p. 116, 52 S. Ct. 460, 463, 76 L.Ed.

999,…said, “Mere size…is not a n offense against the Sherman Act unless magnified to the point

at which it amounts to a monopoly…but size carries with it an opportunity for abuse that is not to be

ignored when the opportunity is proved to have been utilized in the past.” “Alcoa’s” size was

“magnified” to make it a “monopoly”; indeed, it has never been anything else; and its size not only

offered it an “opportunity for abuse,” but it “utilized” its size for “abuse,” as can easily be shown.

It would completely misconstrue “Alcoa’s” positio n in 1940 to hold that it was the passive beneficiary

of a monopoly, following upon an involuntary elimination of competitors by automatically

operative economic forces. Already in 1909, when its last lawful monopoly ended, it sought to

strengthen its posi tion by unlawful practices, and these concededly continued until 1912. In that year

it had two plants in New York, at which it produced less than 42 million pounds of ingot; in 1934 it

had five plants (the original two, enlarged; one in Tennessee; one in N orth Carolina; one in

Washington), and its production had risen to about 327 million pounds, an increase of almost eight -

fold. Meanwhile not a pound of ingot had been produced by anyone else in the United States. This

increase and this continued and undist urbed control did not fall undesigned into “Alcoa’s” lap;

obviously it could not have done so. It could only have resulted, as it did result, from a persistent

determination to maintain the control, with which it found itself vested in 1912. There were at least

one or two abortive attempts to enter the industry, but “Alcoa” effectively anticipated and forestalled

all competition, and succeeded in holding the field alone. True, it stimulated demand and opened

new uses for the metal, but not without making su re that it could supply what it had evoked. There is

no dispute as to this; “Alcoa” avows it as evidence of the skill, energy and initiative with which it has

always conducted its business: as a reason why, having won its way by fair means, it should be

co mmended, and not dismembered. We need charge it with no moral derelictions after 1912; we may

assume that all its claims for itself are true. The only question is whether it falls within the exception established in favor of those who do not seek, but cann ot avoid, the control of a market. It seems to

us that that question scarcely survives its statement. It was not inevitable that it should always

anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it

to keep doub ling and redoubling its capacity before others entered the field. It insists that it never

excluded competitors; but we can think of no more effective exclusion than progressively to embrace

each new opportunity as it opened, and to face every newcomer wit h new capacity already geared

into a great organization, having the advantage of experience, trade connections and the elite of

personnel. Only in case we interpret “exclusion” as limited to maneuvers not honestly industrial, but

actuated solely by a desir e to prevent competition, can such a course, indefatigably pursued, be

deemed not “exclusionary.” So to limit it would in our judgment emasculate the Act; would permit

just such consolidations as it was designed to prevent.

We disregard any question of “in tent.” Relatively early in the history of the Act —1905 —Holmes, J., in

Swift & Co. v. United States, explained this aspect of the Act in a passage often quoted. Although the

primary evil was monopoly, the Act also covered preliminary steps, which, if contin ued, would lead

to it. These may do no harm of themselves; but if they are initial moves in a plan or scheme which,

carried out, will result in monopoly, they are dangerous and the law will nip them in the bud.…In

order to fall within § 2, the monopolist m ust have both the power to monopolize, and the intent to

monopolize. To read the passage as demanding any “specific,” intent, makes nonsense of it, for no

monopolist monopolizes unconscious of what he is doing. So here, “Alcoa” meant to keep, and did

keep, that complete and exclusive hold upon the ingot market with which it started. That was to

“monopolize” that market, however innocently it otherwise proceeded. So far as the judgment held

that it was not within § 2, it must be reversed.