A monopoly situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products.
According to a strict academic definition, a monopoly is a market containing a single firm. In such instances where a single firm holds monopoly power, the company will typically be forced to divest its assets. Antimonopoly regulation protects free markets from being dominated by a single entity.
A pure monopoly is a single supplier in a market. For the purposes of regulation, monopoly power exists when a single firm controls 25% or more of a particular market. Governments may grant a firm monopoly status, such as with the Post Office, which was given monopoly status by Oliver Cromwell in 1654. The Royal Mail Group finally lost its monopoly status in 2006, when the market was opened up to competition.
A monopoly could be created following the merger of two or more firms. Given that this will reduce competition, such mergers are subject to close regulation and may be prevented if the two firms gain a combined market share of 25% or more.
For example, if you want to buy a new automobile and there is only one brand from which you can purchase your car, that brand will be considered to hold a monopoly. Monopolies are harmful because they allow one entity to set the price on goods without consideration for competitive, affordable pricing. This is because when there is a monopoly, there are no competitors. This leaves customers at the mercy of the monopolist.
In the late 1990s, Microsoft faced several suits due to perceived violations of these antitrust laws. Had the Justice Department proved the company was in violation, Microsoft would have been forced to divide itself into subsidiaries in order to break up the potential monopoly. This is happening with Google in Europe at present and the most well-known case was in the US when the government forced the telephone companies to break into several regional businesses called “baby bell".

By Barry Norman, Investors Trading Academy