Tag: antitrust

Et Tu, Major League Baseball?


Good Friday traditionally is honored by Christians as part of their Easter weekend religious practices to honor the death and resurrection of Jesus Christ. It is where our focus should rest, especially for devout people of faith, Catholic and Protestant.

Sadly, Major League Baseball (MLB) chose to use the afternoon to pay homage to perhaps our newest and fastest-growing religion – woke progressive politics. To wit: under pressure from so-called “Civil Rights” groups and activists, they chose to relocate the 2021 All-Star game and draft scheduled for Atlanta, Georgia to another city, to be named later. My money is our national capital of wokeness, San Francisco.

Klobuchar’s Antitrust Blunder


This past week, Senator Amy Klobuchar, now the head of the Senate Judiciary subcommittee on antitrust, proposed the most comprehensive legislative reform of antitrust law since the passage of the Clayton Act in 1914. That statute extended the reach of antitrust law so that it covered not just Sherman Act cases of monopolies and cartels in restraint of trade, but also any merger or consideration that, to quote the language of Section 7 of the Clayton Act, might “substantially lessen competition” or “tend to create a monopoly.”

To Senator Klobuchar, that 107-year-old statutory standard is not sufficient for dealing with antitrust law in the digital economy. She has insisted that breaking up companies like Facebook “has to be on the table.” In a blunt statement, she projects her optimistic vision:  “When we talk about structural remedies and breaking things up, those companies would then be unleashed to do even more”—but she doesn’t say how that welcome outcome would be achieved. Indeed, if a breakup would have that positive effect, then shareholders of those companies should be demanding that management adopt that course of action to maximize the value of their holdings. But underlying her analysis is the tacit assumption that there are no efficiency gains from the integrated operation of a single firm, let alone from any future merger or acquisition.

Unfortunately, she offers no systematic explanation as to why that negative judgment is correct. Nor does she explain exactly why the current system of merger evaluation is deficient. In his classic 1968 article, “Economies as an Antitrust Defense: The Welfare Tradeoffs,” the late Nobel laureate Oliver Williamson explained why it was not possible to have a presumptive condemnation of mergers. On the one side, mergers can increase industry concentration, exerting the usual negative effects on consumer welfare, including higher prices and perhaps lower quality. But on the positive side are the cost savings from the merger brought through efficiency gains in operations. The challenge is to measure and weigh their relative magnitudes.

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Is There an Antitrust Crisis in Big Tech?


This past week, the Democratic majority in the House of Representatives released an exhaustive report, Investigation of Competition in Digital Markets, which purports to demonstrate a looming crisis in today’s digital markets, to which the strict application of the antitrust laws is the obvious antidote.

The report attributes a famous remark to Louis Brandeis: “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” To the Democrats, the combined $5 trillion market value of four major tech companies—Amazon, Apple, Facebook, and Google—offers ample confirmation of the increasing concentration of wealth and power in a few hands. The report believes that these four firms, each in its own way, raise serious antitrust concerns because of their ability to control access to markets, block innovation by smaller rivals, impose onerous conditions on potential customers and rivals, and skew the organization of trade and commerce in ways antithetical to the general welfare.

Although the report does not speak about breaking up these companies, it does offer a long list of questionable recommendations to address current antitrust problems. Those recommendations include limiting the ability of “certain dominant platforms” from operating in “adjacent lines of business,” erecting nondiscrimination requirements in order to prevent various forms of “self-preferencing,” a “presumptive prohibition of mergers and acquisitions by dominant platforms,” and “prohibitions on abuses of superior bargaining power.”

Antitrust and Big Tech: Some Things to Keep in Mind


Democrats have turned on Big Tech. At least that’s the conclusion of Axios reporter Kim Hart in a new piece, “Tech’s new Washington problem: Democrats,” where she notes the “public shaming” of tech firms at this week’s hearing on Russian interference in the 2016 election.

And this all feeds into how Democrats are likely to make concentration of corporate power a big political issue in the coming years. As the congressional “Better Deal” agenda puts it: “We will crack down on monopolies and the concentration of economic power that has led to higher prices for consumers, workers, and small business — and make sure Wall Street never endangers Main Street again.”

And while they don’t get name-checked in the agenda, Big Tech is certain to catch some heat. And there are activists eager to break up some of the megaplatforms, or at least highly regulate them.

Globalization, Competition and My Wet Basement


In New England, a dehumidifier is pretty much a required appliance in spring and summer. That goes double in my neighborhood, which was built on swampland in the 1950s.

Last spring, I received a notice that my dehumidifier – U.S.-branded, but manufactured in China – was subject to a safety recall. Apparently there were some instances of similar units catching fire. By shipping back certain parts, I was entitled to a gift card and discount coupon towards a new one. Grumbling, I removed the parts, sent them back, and waited for my coupon. After it came, I shlepped out to the store, shopped for a new dehumidifier, and shlepped the new unit home.