Serial Obstructionism

by Don Boudreaux on April 2, 2011

in Antitrust, Competition, Complexity & Emergence, Creative destruction, Crony Capitalism

Here’s a letter to the Wall Street Journal:

You rightly call out Microsoft and Google for their hypocrisy in prodding antitrust authorities to investigate each other for alleged anticompetitive activities (“Microsoft’s Antitrust Turnabout,” April 2).  As detestable as these actions are, antitrust can be understood only if it is recognized for what it really is: a tool for bludgeoning innovative firms that make markets more competitive and consumer-friendly.

It has always been so. A revealing instance of how ridiculous antitrust investigations can be is the F.T.C.’s successful persecution, in the 1970s, of Borden for that firm’s audacity at reducing the price of its reconstituted-lemon-juice product, ReaLemon, when other firms introduced competing products.  Or recall the F.T.C.’s ready-to-eat breakfast-cereals investigation that forced Kellogg’s, General Foods, General Mills, and Quaker for years to defend themselves against the charge of – wait for it! – “brand proliferation.”  These firms were accused of offering such a full range of types of breakfast cereals that each and every consumer demand for cereal was met – from demands by the health-conscious for unsweetened Corn Flakes to demands by children for sugary Cocoa Puffs.  These firms’ success at satisfying consumer demands, noted the F.T.C., made entry by upstart cereal producers more difficult.  So the F.T.C. naturally accused Kellogg’s and other established firms of monopolizing the market.


Donald J. Boudreaux


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