Legal Literacy - This article discusses the Per Se Illegal Approach and the Rule of Reason in the Anti-Monopoly Law. Let's take a look at the explanation!

Written by:Defian Putri Tiara (Law Student, Universitas Terbuka)

Monopoly

Definition of Monopoly

Monopoly is the control of production and/or marketing of goods and/or the use of certain services only by one business actor or one group of certain business actors. Control in a monopoly results in losses to the public interest, including the market. Monopoly clearly harms trade. In establishing a court decision against business actors who have committed a monopoly, judges do not immediately hand down a decision, but judges need to examine the causes and effects of the monopoly on the public.

Characteristics of a Monopoly Market

  • One Seller:There is only one company that controls the market.
  • No Close Substitutions:The products or services offered do not have similar substitutes.
  • Sellers Have the Power to Determine Prices:Sellers can set prices without having to worry about competitors.
  • Lack of Innovation:Monopolies have no incentive to innovate because there are no competitors to encourage them.
  • High Profits:Monopolies can earn high profits because there are no competitors to depress prices.

Causes of Monopoly

  • Ownership of Natural Resources:One company has exclusive access to the natural resources needed to produce products.
  • Patents and Copyrights:One company has exclusive rights to produce and sell certain products.
  • Government Grants Monopoly:The government grants exclusive rights to one company to provide certain services.
  • Large Scale Efficiency:One company has lower production costs compared to other companies.