Using density functional theory implemented within the generalized gradient approximation, a new non-magnetic insulating ground state of solid oxygen is proposed and found to be energetically favored at pressures corresponding to the $epsilon$-phase. The newly-predicted ground state is composed of linear herringbone-type chains of O$_2$ molecules and has {it Cmcm} symmetry (with an alternative monoclinic cell). Importantly, this phase supports IR-active zone-center phonons, and their computed frequencies are found to be in broad agreement with recent infrared absorption experiments.