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Quotation of the Day…

Posted By Don Boudreaux On July 7, 2011 @ 10:14 am In Antitrust,Business as usual,Competition,History | Comments Disabled

… is from page 99 of the late Yale Brozen [1]‘s 1982 book Concentration, Mergers, and Public Policy [2]:

[S]uppressing competition can cause [industrial] concentration to decline.  In 1953, Judge Wyzanski ruled that United Shoe Machinery had monopolized the shoe machinery industry, although all its practices were “honestly industrial.”  He ordered, as a remedy, that United stop competing.  These, of course, were not the literal words of the order.  He ordered the cessation of “practices which without being predatory, abusive or coercive were in economic effect exclusionary.”  Since all successful competitive acts and practices are “exclusionary” in the sense that they divert business toward the firm and away from its rivals, he, in effect, ordered United to stop competing.  The only basis for finding United guilty of monopolizing was its 85 percent share of the market for major machines.  Since the decree, affirmed in 1954 by the Supreme Court, provided for a 1965 review by the Court, the only way for United to avoid further penalties on review was to stop being so competitive and allow its market share to diwindle.

As ordered by the Court, United stopped the provision of free repair service for its machines.

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[1] Yale Brozen: http://www.davidrhenderson.com/articles/0698_inmemoriamyale.html

[2] Concentration, Mergers, and Public Policy: http://www.amazon.com/Concentration-Mergers-Public-Studies-Corporation/dp/0029042704/ref=sr_1_1?s=books&ie=UTF8&qid=1310047897&sr=1-1

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