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'Level Playing Field' at Justice?

          A former Justice Department attorney has taken issue, in a private
  post to me, with my earlier observation that its lawyers are generally
  "bureaucrats with no real commitment to the antitrust goal of a level
  playing field in the economic world."  My case for this assessment is of
  course their (non)enforcement RECORD over the past 2 decades, one which is
  summarized in my Antitrust Overview in my antitrust Web site (below).  The
  particulars of my longstanding complaint against that persistent, official
  neglect are spelled out in the following excerpt from that Overview.  (Anne
  Bingaman was of course Joel Klein's predecessor; there've been no policy
          I need not point out that, if Justice's Antitrust Division had been
  doing its job during those past 20 years--assuring a level playing field--we
  wouldn't have the Microsoft problem in 1997.
          Charles Mueller, Editor
                                  The Bingaman/Pitofsky Follies 
          The lion's share of the blame for the current headlong monopolization of
  the U.S. economy, however, has to be laid squarely at the feet of two people,
  Anne Bingaman (President Clinton's head of the Antitrust Division,
  Department of Justice) and Robert Pitofsky, the Clinton administration's
  FTC (Federal Trade Commission) chairman. The Reagan/Bush holders of
  these offices were, as noted, true devotees of the laissez-faire ideology and
  instinctive defenders of society's rich and powerful. Nothing could
  reasonably be expected of them other than exactly what they delivered, a
  pro-monopoly antitrust policy. On the basis of the past historical cycles
  here, however--and on the basis of President Clinton's own eloquently
  expressed concerns for the poor and the weak--there was every reason to
  believe that he would appoint people of a similar persuasion as heads of
  these two antitrust agencies. Bingaman and Pitofsky have, however, not
  only failed to undo the damage caused by their laissez-faire predecessors in
  those agencies but have, indeed, retained their staff ideologues and
  extended their policies en masse. 
                            The Review's 11 Antitrust Reforms 
          In a series of articles preceding Clinton's November '92 election
  and for a
  couple of years thereafter, this journal itemized and spelled out in some
  detail the antitrust reforms that were (and are) desperately needed by the
  country. We offered 11 such suggestions (see especially Mueller, Vols. 24:1
  and 24:2, below): 
    1.Restore the Private Antitrust Cases. 
    2.Demote Economic 'Theory' In Antitrust. 
    3.Abolish the FTC's Bureau of Economics and Its Counter- part at
    4.Seek the Reversal of Anticompetitive Court Precedents. 
    5.Investigate the LEC 'Economics' Training Program for the U.S.
    6.Weigh Carefully the Antitrust Records of Candidates for the Federal
    7.Develop a Series of New Antitrust 'Guidelines.' 
    8.Take President Clinton's Antitrust Program to the Public. 
    9.File Cases to Illustrate the Key Principles of the New Antitrust
   10.Inaugurate a New 'Intervention' Program In the Private Cases. 
   11.Monitor the Economic Effects of Justice/FTC Antitrust Cases. 
                                 Retained 'Staff Ideologues' 
          None of these needed reforms has been undertaken by Bingaman and
  Pitofsky. Indeed, they are scrupulously following the "consolidationist"
  policies of the Reagan/Bush ideologues they succeeded, further widening
  and deepening the country's monopoly problem and sorely worsening its
  growing inequalities of income and wealth. They have: 
       Given no speeches before either consumer or small-business groups
       (the traditional constituencies of antitrust), confining themselves
       exclusively to corporate and defense-bar groups; 
       Given no speeches or made any other public statements in opposition
       to the laissez-faire "educational" programs for the federal judges; 
       Made no effort to replace the laissez-faire ideologues on their staffs
       (each has nearly 100 professional economists and some 300 antitrust
       lawyers) with professionals who are sympathetic to effective
       competition and thus to vigorous antitrust enforcement; 
                                        No Antitrust 'Rights' 
       Expressed no criticism of the scores of post-'75 court decisions that
       closed down the 1,500 private antitrust cases that had previously been
       brought each year; 
       Brought no monopolization cases of any kind, i.e., those aimed at
       eliminating or reducing existing market power and its inflated prices; 
       Brought no cases challenging exclusionary/predatory practices of larger
       Brought no cases aimed at reversing any of the patently erroneous
       antitrust doctrines announced by the courts in the post-'75 years; 
       Intervened in no private antitrust cases on the side of the injured
       small-enterprise plaintiff; 
       Articulated no rights of the country's 20 million small-business firms
       under the antitrust laws they administer; 
                                          60% 'Safe Harbor' 
       Challenged no mergers between competing firms whose (combined)
       market share is less than around 60%, offering no explanation as to
       why they are ignoring their own Merger Guidelines--which condemn
       mergers yielding shares of less than 1/4th that figure (see Rill, Vols.
       23:2 and 23:3 for the text of those Guidelines); 
       Made no mention of the longstanding empirical findings of
       mainstream economists that market power begins with 4-firm shares
       of around 40% (and single-firm shares of about 12%); 
       Made no mention of the similarly longstanding research findings that
       no significant industry in America requires a market share of more
       than 10% to realize all available economies of scale; 
       Litigated virtually no cases of any kind, relying almost exclusively on
       "consent" settlements while systematically setting aside injunctions
       and cease-and-desist orders won by their (pre-'75) predecessors in
       hard-fought cases against large corporate recidivists; 
                                       'Fix-It-First' and 
                          Ignoring Over 100 Industry Complaints 
       Eviscerated the law against anticompetitive mergers by employing a
       device called "fix-it-first," a policy under which corporate giants in
       direct competition with each other are allowed to go ahead and
       combine so long as they "consent" to dispose of tiny parts of the total
       assets involved ("overlapping" product lines or facilities that, if
       retained, would together account for at least 60% (more typically, 80%
       or more) of some minuscule "market" of little importance to the
       merging titans)--a doctrine that allows any firm to acquire 90% or
       more of any competitor it likes (e.g., Mattel's currently pending
       acquisition of fellow toy giant Hasbro, to be accompanied by the
       "divestiture" of a couple of baubles owned by one or the other); 
       Ignored all pleas by small enterprises to enforce the laws against
       anticompetitive practices by dominant firms (e.g., mergers that created
       a firm with 90% of the U.S. board-game market, Review, Vol. 25:4,
       below, and exclusive dealing by a firm with 70% of the country's
       heavyweight motorcycle industry--the latter approved despite the
       complaints to the FTC by more than 100 of the giant's dealers and
       scores of other industry members, Review, Vol. 26:1 and 26:2, below); 
                                   Abandoned Honest Science 
       Adopted an "efficiencies defense" for mergers yielding obvious
       monopoly power, notwithstanding at least two centuries of clear
       evidence that efficiency is itself a product solely of effective
       competition and that monopoly is the mother of inefficiency; 
       Withheld virtually all useful information on their actual case
       standards by writing no opinions and revealing in their "consent"
       settlements only the shares of the units involved in their
       mini-divestitures (not the shares held by the merging units they
       Made no effort to determine the views of the country's mainstream
       (majority) economists who specialize in antitrust economics on the
       number and size distribution of firms required to produce effective
       price competition--and thus competitive prices for consumers--nor on
       the minimum-efficient scales of operation in any significant U.S.
       industries; and 
       Made no effort to determine the economic effects of their own cases
       over the years (and thus to determine which of their actions have in
       fact been followed by higher or lower prices for the public). 
                               'Political and Corporate Shills' 
          None of this means that antitrust itself is either misguided or
  It simply means that, for the past two decades, it has been overwhelmed by
  politics. Presidents who owe their elections in significant part to
  monopolists--or presidents who are sufficiently weak that they feel the need
  to curry favor with them--are of course more likely to put political and
  corporate shills in charge of the country's antitrust agencies than serious,
  competent enforcers, e.g., FDR's Thurman Arnold of the late 1930s. 
                                 'Put Better People In Charge' 
          And, as the above recital of what Mrs. Bingaman (wife of Senator Jeff
  Bingaman, D-New Mexico) and Mr. Pitofsky (formerly with Arnold &
  Porter, a Washington law firm that represents monopolies) have not done
  should make clear, the remedy for the problem is quite straightforward: Put
  better people in charge of those two key agencies. With good leadership
  there, U.S. antitrust could be revived in a matter of weeks. (See Mueller on
  Arnold, Vol. 23:4.) In the meantime, the leaders of the world's other 200
  countries would be well advised to view with keen skepticism any antitrust
  counsel offered by these U.S. officials and their staffs. Their real clients,
  alas, are not--on the evidence to date--the American people and their agenda
  is not competition or efficiency but "consolidation," with its inevitable
  (regressive) redistribution of income and wealth and lowered vitality of U.S.
          Charles Mueller, Editor