Re: Antitrust Bill of Rights

[wfcooper@tiac.com (Bill Cooper)]

  On Wed, 26 Nov 1997 20:25:16 -0500 (EST), charles mueller
  <cmueller@metrolink.net> wrote:
  
  
  >        It is easy enough to draft a statute that says 'monopolies' are
  >illegal, along with 'unfair' practices, 'restraints of trade,' and the like.
  >How, though, are you going to define those broad, vague terms?  If you, the
  >draftsman, don't want to tackle that chore, you can of course remain silent
  >and let your nation's courts (judges) define them for you.  But that creates
  >a problem:  Being quite human, they'll define them in ways that will reflect
  >THEIR policy notions, not yours.  If they're 'conservative' in their
  >political/economic orientation--as judges around the world generally
  >are--they'll promptly gut your new antitrust law.  
  
  I think Charles is letting liberal jurists off the hook a little
  easily here.  After all, small entrepreneurs that have to scramble to
  make a payroll every week are far less likely to have any brief with
  liberal nostrums like affirmative action, environmental protection or
  labor unions.  It's the private sector bureaucrats at huge
  corporations, that are insulated from the costs of these things by
  their monopolistic ability to pass the costs onto consumers, that are
  likely to endorse them.
  
  
  
  >                                                     ANTITRUST
  >                                                  BILL OF RIGHTS
  >
                                       # 1-6 snipped
  
  >        7.  Every consumer has the right to buy at a competitive
  >price--minimum cost plus a competitive profit--and sustained pricing at a
  >higher-than-competitive level shall be prima facie evidence of monopoly.  In
  >no case, however, shall the Antimonopoly Authority be required to prove such
  >supracompetitive pricing, either currently or in the past.  Empirical
  >economic science has established, and the Legislature so finds, that
  >effective (price) competition generally ceases--and price begins to exceed
  >the competitive level--when the 4 largest firms in an industry or market
  >control 40% or more of its total sales and the single largest 12% or more.
  >To require the litigation of this issue in every case is prohibitively
  >expensive, time- consuming, wasteful, and ultimately defeating for national
  >antimonopoly policy.  Accordingly, it is the policy of this Nation to
  >promote deconcentrated economic markets and to prohibit monopoly as
  >evidenced by the foregoing controlling market shares.
  
  If your hypothetical country did have an industry populated by 10
  equal size firms, that knew that any increase in size would bring down
  the wrath of the Anti-trust Bureau upon them, wouldn't they tend to
  forgo increasing market share in favor of maximizing pre unit profit
  anyway?  What would they have to gain from trying to increase market
  share?
  
  Admittedly entrance barriers might be decreased, and the tendency of
  firms to defend market share might go down (since the benefits would
  accrue to the entire market sector, and not just one or two firms),
  but would that be enough to get long term competitiveness?  Ire any
  evidence to support this?
  
  Bill Cooper
  wfcooper@tiac.com