In 1998 the Department of Justice began a case against against Microsoft, accusing it of monopolizing the market for Internet browsers by bundling the browser with its operating system, Windows A trial in 2000 ended with a judgment that Microsoft be split in two with one company having the operating system and another having applications An appeals court overturned that decision a year later Actions against large firms such as Microsoft are politically popular However, neither policy makers nor economists have been able to establish that they serve consumer interests We have seen that the Department of Justice and the Federal Trade Commission have a policy of preventing mergers in industries that are highly concentrated But, mergers often benefit consumers by achieving reductions in cost Perhaps the most surprising court ruling involving such a merger came in 1962 when the Supreme Court ruled that a merger in shoe manufacturing would achieve lower costs to consumers The Court prevented the merger on grounds the new company would be able to charge a lower price than its rivals! Clearly, the Court chose to protect firms rather than to enhance consumer welfare What about actions against price-fixing? The Department of Justice investigates roughly 100 price-fixing cases each year In many cases, these investigations result in indictments Those cases would, if justified, result in lower prices for consumers But, economist Michael F Sproul, in an examination of 25 price-fixing cases for which adequate data were available, found that prices actually rose in the four years following most indictments Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 853