What Are the Most Famous Monopolies?

To date, the most famous United States monopolies, known largely for their historical significance, are Andrew Carnegie’s Steel Company (now U.S. Steel), John D. Rockefeller’s Standard Oil Company, and the American Tobacco Company.

American monopolies date back to colonial administrators who awarded large companies exclusive contracts to help build the New World. From the late 19th to the early 20th century, the three organizations mentioned above maintained singular control over the supply of their respective commodities. Without free-market competition, these companies could effectively keep the price for steel, oil, and tobacco high.

Understanding the Most Famous Monopolies

Government regulation of early American monopolies was initially absent. However, the creation of antitrust regulation in the United States, in the form of the 1890 Sherman Antitrust Act, led to the eventual dismantling and restructuring of Standard Oil and American Tobacco by 1911. Like many antitrust cases brought against companies even today, it took several years for these first cases to navigate through the court system.

Unlike Standard Oil and American Tobacco, U.S. Steel was challenged, but not found to be the sole supplier of steel to the U.S. market. However, it continued to possess a considerable market share for many years. In 2019, U.S. Steel was the 27th-largest producer of steel in the world, according to the World Steel Association.

More Modern Times

A more recent monopoly to have experienced the same fate as Standard Oil and American Tobacco is the American Telephone and Telegraph Company (AT&T).

Subject to many lawsuits spanning back to the 19th century, AT&T became entangled in one it could no longer escape. In 1974, the U.S. Department of Justice brought suit against the telecommunications giant, citing it had violated antitrust laws. Specifically, AT&T was accused of monopolizing the American telecommunications industry, preventing fair competition.

In 1982, AT&T finally settled with the government. AT&T was required to divest 23 of its local telephone companies, 67% of its assets. The company split into seven regional companies, known as Baby Bells. In return, AT&T was allowed to enter the computer business

Near-Monopolies

A good example of a near-monopoly from very recent history is the De Beers Group, the best-known diamond mining, production, and retail company in the world. For almost a century, De Beers monopolized the diamond industry. However, market and regulatory factors diminished its market share from approximately 85% in the late 1980s to around 23% in 2020.

While several U.S. companies in sectors like technology, consumer products, and food and beverage manufacturing have been accused of being monopolies in the media and some in courts, they have rarely been proven so.

The Role of Nationalization

Most monopolies that exist today do not necessarily dominate an entire global industry. Rather, they control major assets in one country or region. This process is called nationalization, which occurs most often in the energy, transportation, and banking sectors.

The largest such example of a nationalized major asset is Saudi Aramco, also known as the Saudi Arabian Oil Company. Headquartered in Dhahran, Aramco is Saudi Arabia's state-owned oil and natural gas company.

Founded in 1933 by the Standard Oil Company of California, Aramco was taken over by the Saudi Arabian government in the 1970s. Today, most of the government's budget revenues come from Aramco's revenues.

In 2019, Aramco set a record with the world's largest IPO, raising more than $25 billion from 3 billion shares sold. Continuing its success, the company reached its highest market value of $2.3 trillion in March 2022. Aramco is the world's second most valuable company, next to Apple.

The Bottom Line

For everything, there is a season, even for monopolies. Monopolies often can help a country or region build or shore up its infrastructure quickly, efficiently, and effectively. But when any company becomes too dominant, leaving little room for competition, service, quality, and consumer wallets can suffer. That's where antitrust laws come in.