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When du Pont developed cellophane (you know, plastic wrap) it was prosecuted by the Department of Justice under the terms of the Sherman Anti-Trust Act.

Why?

Because after spending millions of dollars in R&D to develop this new product, it was able to increase sales from $0 to $100 million per year over a 20 year period. And when it first marketed the plastic wrap it sold it for $2.65 per pound and by the end of WWII it was selling for 45 cents per pound.

This is not an isolated case. The same thing happened when

  • GE developed tungsten carbide (officers were each fined $5,000 for losing money and monopolizing this new product.
  • the Morton Salt company gave quantity discounts to its large customers – and the Supreme Court found that to charge Morton did not require that their discrimination must have harmed competition, but only that there was a “reasonable possibility” that it “might” have had such an effect.
  • Cement companies were forbidden from including the cost of freight in their prices (read that eBay merchants!)
  • A&P grocery stores threatened to make its own Corn Flakes when its suppliers were not willing to give them bulk discounts.
  • Topps baseball cards was sued because it signed exclusive contracts with major league baseball players’ photos on their cards
  • Consolidated Food Corporation was sued for a reciprocity agreement with a farm supplier. In other words, they formed a deal where they said, “I’ll buy fruit from your farm if you purchase goods from my store,” (this is in fact what Wegmans does today – my guess is that they tiptoe around the “you buy stuff from me” part)

The moral of course is twofold. First is that antitrust has nothing at all to do with protecting consumers. And second, is that it is entirely plausible that virtually ANY decision made by businesses and entrepreneurs may arbitrarily and suddenly deemed illegal. This is the United States – not some “Banana Republic.” We’ve set up a system of Goldi-Locks regulation where prices deemed too high for the lords in DC will be evidence of monopolistic practice and firms forced to break up, where prices deemed too low for the lords in DC will be evidence of cutt-throat pricing and fines will be handed out, and when prices are similar at your firm than others – of course that is colluding with other firms to keep prices fixed – which is illegal, of course.

As RW Grant wrote in The Incredible Bread Machine (from which the previous examples are drawn):

When it comes to a mugger or a rapist or a murderer, the courts exercise commendable concern for the civil rights of the defendant. When it comes to the businessman charged with an antitrust violation, however, it is quite a different matter.

Antitrust is a bad idea gone wrong … based on the assumption that the businessman must serve the interests of “society” as determined by government … but in a free society the individual is not forced to serve others … that is the fate of slaves, not free people.

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