Innocent Monopoly

Another example of the defense that no agreement existed is that of an innocent monopoly. An innocent monopoly, as opposed to a coercive monopoly, is one that is not the result of collusion by competitors. Instead, an innocent monopoly may result from superior business practices, products, cost structures, recruiting, or any number of factors. To be sure, even post-graduate business universities have yet to formulate the criteria that guarantee your business will dominate a market, although they explore what contributes to the making of a dominant market leader in the attempt to uncover such a formula. Keep in mind, mere possession of a monopoly is not inherently illegal, and a few companies (Wal-Mart and Microsoft being the obvious examples) still have monopolies over their markets.

Some monopolies are attributed to “historic accident,” which translates to “the first to try it.” Successfully obtaining a patent on a design before anyone else has the idea would be an example of an innocent monopoly due to “historic accident,” and would be a legitimate basis for the formation of a monopoly. The coercive monopoly requires some form of agreement, collusion, or conspiracy among competitors. It is the coercive monopoly, therefore, that is outlawed.