## Facts

- The United States brought a civil action under the Sherman Act against Aluminum Company of America (Alcoa), certain related entities, and Aluminum Limited, a Canadian corporation created to hold Alcoa’s non-U.S. assets after a corporate reorganization.
- The government alleged Alcoa monopolized the production and sale of “virgin” aluminum ingot in the United States.
- The government also alleged participation in foreign cartel arrangements (“Alliance”) that set quotas and restrictions abroad but affected imports and competition in the United States.
- The district court dismissed the government’s claims after a lengthy trial.
- Due to Supreme Court disqualifications and special statutory authorization, the Second Circuit heard the appeal and entered final judgment.

## Issues

1. Whether the Sherman Act reaches foreign agreements and conduct undertaken abroad when they are intended to affect, and do affect, U.S. imports and domestic commerce.
2. What is the relevant product market for assessing monopoly power in aluminum (including whether “scrap” aluminum should be included with “virgin” ingot).
3. Whether Alcoa’s dominance, attained and maintained through anticipatory capacity expansion to meet demand, constituted unlawful monopolization under Sherman Act § 2.
4. Whether Alcoa and Aluminum Limited, or Aluminum Limited and other foreign producers through the Alliance, engaged in a combination or conspiracy in restraint of trade under Sherman Act § 1.

## Decision

- The Second Circuit reversed the dismissal in relevant part and held the Sherman Act could apply to foreign cartel conduct intended to affect, and actually affecting, U.S. commerce.
- The court defined the relevant market as “virgin aluminum ingot” in the United States and rejected including scrap aluminum for market-share measurement on the record presented.
- On that market definition, Alcoa’s share was sufficient to establish monopoly power.
- The court found Alcoa unlawfully monopolized under § 2, relying in part on Alcoa’s deliberate policy of expanding capacity to meet or preempt demand increases in a manner that effectively foreclosed entry.
- The court indicated Alliance agreements made abroad would be unlawful if intended to affect and actually affecting U.S. imports, and analyzed Aluminum Limited’s potential participation under that standard, while treating Alcoa and Limited as legally distinct entities for liability analysis.

## Legal Principles

- The Sherman Act applies to foreign conduct when the conduct is intended to have effects in the United States and does have such effects (effects-based extraterritorial jurisdiction).
- Relevant market definition for monopoly analysis may exclude functionally substitutable products where competitive conditions and control over supply and marketing make them poor measures of the defendant’s power.
- Monopoly power may be inferred from an overwhelmingly large market share in a properly defined market.
- Monopolization under § 2 can be found where a firm deliberately acquires or maintains monopoly power through conduct that effectively excludes rivals, including preemptive capacity expansion that blocks meaningful entry, even absent classic predatory tactics.

## Conclusion

The Second Circuit held Alcoa liable for monopolization of the U.S. virgin aluminum ingot market and applied the Sherman Act to foreign cartel arrangements that were intended to affect, and did affect, U.S. commerce, establishing influential standards on extraterritorial effects, market definition, and exclusion through maintaining dominant capacity.


United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945)