The Los Angeles Times ran a story this past Monday suggesting that the Supreme Court, under the influence of the Bush Administration and big business lobbies, is relaxing its enforcement of antitrust law. Over the course of the past year, the Court has relaxed or repealed rules designed to guard against anti-competitive strategies, like price-fixing and collusion. This reveals a trend in the political economy toward the realization of laissez-faire in its purest sense. According to Albert Foer, president of the American Antitrust Institute, "The court is on a path to reshape the law to conform to the Chicago school of law and economics," which is most famous for its advocacy of free market theories.
Just last year, the Court overturned a barring of the joint venture between oil giants, Texaco and Shell. It ruled that the joint venture would not qualify as price-fixing because the two companies had not been competitors in the market for selling gasoline in the West. In another case, it repealed a long-standing rule that had made product “tying” illegal as an anti-competitive strategy. And most recently, the Court overruled a huge verdict against Weyerhaeuser, the lumber corporation that had been found guilty by the State of Washington of entry deterrence behavior.
This trend of reducing the strength of antitrust law shows that globalization and exponential technological progress are changing the nature of business competition. The Court seems to believe that what was traditionally considered to be illegal anti-competitive behavior—price-fixing, collusion, and entry deterrence—may now have become the forces that drive competitive free trade. Either that, or it is has bought into the pro-big business conservatism that the Bush Administration has demonstrated through its tax policies and partnership with private defense contractors. A reaction to this anti-antitrust trend from the now Democrat-controlled Congress remains to be seen but is certainly not unexpected.
Posted by: Josh Bennett, Charlotte Pool, Jeff Kerestes
2 comments:
The public perception of trends in the enforcement of antitrust law is not an issue that has been ignored by the federal government. Three years ago the Antitrust Modernization Commission was created by the U.S. Congress to study the state of antitrust legislation and activity in the FTC and in the courts. On Monday, 2 April they presented a huge report that was over 500 pages long.
These types of reports commissioned by Congress typically end with more questions asked than answered, and this is no exception. However there were over 80 recommendations made to the DOJ and the FTC, among those most adamantly impressed being the repeal of the Robinson-Patman Act, according to Deputy Asst. Attorney General Dennis Carlton.
The report also noted the ambiguity of whether enforcement ahs become mroe lax or not. There were numerous instances reported where the perception was of increased strictness, and an equivalent number of instances where the perception was of increased laxness.
Jake Carter-Lovejoy, Jessica Halper, Michael Ledwith, and Drew Muir
As Josh Bennett, Charlotte Pool, and Jeff Kerestes predicted, Democrats have already responded to the dramatic, across the board decrease in the enforcement of anti-trust laws. On March 7, 2007, Democratic senators harshly criticized the Bush administration for their lax enforcement of anti-trust laws and urged the Justice Department to reconsider some of their approvals on mergers and collusions, such as the Justice Department's prior approval of AirTran Holdings Inc.'s proposed purchase of Milwaukee-based Midwest Air Group Inc. Senator Kohl, D-Wis., stated that the "Justice…[Department’s] antitrust division's enforcement have declined 60 percent in the past four years, compared to the final four years of the Clinton administration." Kohl, along with other Democrat leaders, "charged that the administration's “hands-off approach” has encouraged consolidation in a range of industries and hurt consumers by reducing competition." Republicans, however, were also quick to fire back. “Assistant Attorney General Thomas O. Barnett, who heads the Justice Department's antitrust division, rejected the senators' criticisms. The Bush administration challenged 16 mergers in 2006, he said, requiring changes to the transactions or taking other steps. That was the highest number in the past five years.” Clearly, it seems that there is large ambiguity of what both sides consider to be anti-trust law enforcement. While the Justice Department has increased its approval of mergers during the Bush administration, they have also been increasing their challenges of mergers in 2006. However, it seems that perhaps the increasing rate of merger challenges does not make up for the fact that more mergers have been approved, but approval of these increase in mergers does not necessarily mean that it is bad for consumers. Perhaps as a result of harsh enforcement of anti-trust laws in the past couple decades resulted in many companies finding that they would be more profitable and more able to give consumer low-cost goods and services if they merged with other companies. Thus, the issue needs further examination on a case-by-case basis to determine whether or not the increasing rate of approval for business mergers actually decreases social welfare.
http://www.signonsandiego.com/news/business/20070307-1402-antitrust-congress.html
Posted by Caryl Huynh, Chris Coyle, meghan Magennis, and Lance Wang
Post a Comment