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Anti-Antitrust

Posted By Don Boudreaux On June 26, 2007 @ 8:17 am In Antitrust | Comments Disabled

Chicago Tribune columnist Steve Chapman is one of the very best at his craft.  He is consistently interesting and on-target correct.

Today he tackles the ludicrous antitrust action [1] by Uncle Sam against the proposed merger of satellite radio suppliers XM and Sirius, and the similar action against the proposed merger of Whole Foods and Wild Oats.

Here are some snippets:

In both cases, the rationale is that fewer companies will mean fewer
choices and higher prices. But consumers who want what these firms
provide have more options than the Milky Way has stars.

Organic food consumers would not be the suffering captives of this new
company. Every grocery store has a raft of organic offerings, and
chains from Wal-Mart to Trader Joe’s are fighting to get their share of
sales. If the bigger Whole Foods tries price-gouging, customers can
easily find other sources for what they want – from farmers markets to
online suppliers.

The key government error is defining the market as a narrow sector
isolated from other sectors that provide reasonable substitutes. That
same mistake explains the FCC chairman’s aversion to the satellite
radio deal.

And another snippet from the same column, one that refers appropriately to the 1990s-era fear that Microsoft would "conquer" the market for computer software:

Meanwhile, other companies, notably Google, have trounced the Big
Meanie in other areas. Over the last decade, says Thomas Hazlett, a
professor of law and economics at George Mason University, "Microsoft
has seen its market position erode, and it has virtually nothing to do
with the antitrust case."

Antitrust was born in late 19th-century America as a devious means of protecting politically influential producers from the competition [2] posed by new, entrepreneurial firms.  It was never economically sensible.  And it is not so today.

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URLs in this post:

[1] Today he tackles the ludicrous antitrust action: http://www.baltimoresun.com/news/opinion/oped/bal-op.chapman26jun26,0,7247190.story?coll=bal-oped-headlines

[2] Antitrust was born in late 19th-century America as a devious means of protecting politically influential producers from the competition: http://www.reason.com/news/show/29727.html

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