Are Antitrust Laws Enforceable?
Big business is seemingly running wild in the United States. Telecom is consolidating, food and farming is controlled by a handful of large companies, and the energy sector is likewise under the control of a few wealthy interests.
So why doesn’t anybody do anything about it?
That’s the prevailing question these days. It’s clear that many businesses across a number of industries have become frighteningly powerful, and they’ve used that power to influence our policy and lawmakers. For example, the current battle over net neutrality is, at its core, a fight between a very small number of giant telecommunications companies who are looking to find a way to generate more revenues at the expense of a free and open public resource, the internet. There’s really no reason that this should be up for debate, as striking down net neutrality as we know it benefits no one with the exception of those few corporations.
So you have companies like Comcast in the communications industry, Monsanto in agriculture, and companies like Wal-Mart gobbling up huge chunks of the retail market, although they still face some stiff competition. Why should these companies, which are champions of the free market, be allowed to enact a ‘scorched-earth’ policy of sorts to make sure no one else can even become a threat in their respective industries?
Is there an answer at all? In our search for an answer, a definition of what exactly the antitrust laws are and the intended purpose behind them is necessary.
The federal government enforces three major antitrust laws, although states themselves may have other regulations in place. Those three that are covered by federal law are headlined by the Sherman Antitrust Act, which outlaws conspiracies and non-compete contracts in an effort to fix prices. The second is the Clayton Act that is meant to stop mergers and acquisitions that lessen competition, leading to increased prices for consumers. Finally, the Federal Trade Commission Act outlaws unfair methods of competition, and it also led to the establishment of the Federal Trade Commission as we know it today.
By examining these three laws, it seems that many happenings in the current economy should be justly challenged, if not outright outlawed by the federal government. A recent example would be the pending merger between Comcast and Time Warner Cable appears to be a clear violation of the Clayton Act, although there are sure to be details to dig into to be sure.
From the public’s perspective, the enforcement of antitrust laws appears to strengthen the free market by increasing competition and forcing businesses to reinvest their profits into producing better products. But as always, there is another side to the coin.
Antitrust laws are also the target of the business community and some lawmakers, who see them as an unnecessary and outdated regulation that restricts businesses from expanding or reaching their full potential. As globalization has swept the planet and technology has made international trade easier than ever, markets have expanded to a point that few thought were possible. This has not only allowed for increased competition through more and more firms entering the market, but also the expansion of corporate power, as only the powerful are often able to capitalize on far-away resources, including labor.
But there are plenty of reasonable approaches and great thinkers who were not fans of antitrust laws. The great Milton Friedman himself was one of them, but it was a position that evolved over time.
“I was a great supporter of antitrust laws,” Friedman wrote in a 1999 article from The Cato Institute. “I thought enforcing them was one of the few desirable things that the government could do to promote more competition. But as I watched what actually happened, I saw that, instead of promoting competition, antitrust laws tended to do exactly the opposite, because they tended, like so many government activities, to be taken over by the people they were supposed to regulate and control. And so over time I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didn’t have them at all, if we could get rid of them.”
A valid argument, absolutely. But it’s unclear whether Friedman could have pictured a world in which the internet — a platform which acts as a free market all on its own — could be co-opted in favor of the interests of a few giant corporations. Or the concept of ‘terminator seeds.’ Or companies looking to patent human genes.
It’s a different world than it was even fifteen years ago, and recent developments may have changed even Friedman’s mind.
Finding the sweet spot between effective antitrust laws and allowing unrestricted free enterprise is what’s at the core of the issue. Of course, if we had been able to find it, the world would be in much better shape. But we haven’t, and the quest to find it continues. Also, presuming that we were able to put in place the perfect blend, rest assured it wouldn’t stand long against an onslaught of lobbying and legislation aiming to skew things one way or the other.
Whether you’re a fan of antitrust laws or not, it’s important to realize that expanding corporate power is just as dangerous as expanding government power. They both lead to the same outcome — power and wealth concentrated in the hands of a few while everyone else fights over the scraps.
The ironic truth of monopolies is that they are often the product of the free market, and to ensure their long-term encampment at the top, they seek to destroy the very system that put them there. Sure, there are government-backed monopolies, like the United States Postal Service, or Amtrak, and those are both examples of industries that could probably use a jolt.
Getting back to the original question regarding whether or not antitrust laws are even enforced anymore, it doesn’t look like there’s an easy or honest answer. If you were going to take a shot at it, the short answer is that the government has exchanged reigning in corporate power for the advantages of economic gains. When the economy is robust, even for a few (as we’re seeing right now), regulators don’t seem to want to do anything, even if it may help the majority of citizens.
Like many other issues America faces, the problems with antitrust laws and their apparent lack of enforcement has its roots in money influencing the political structure. Is there any easy fix? No. Is it likely to end? Probably not. But the influence big business now has, thanks to the size and power they have not only in terms of dollars, but over the economy at large, ensures that antitrust laws are likely to be shelved by regulators except for the most egregious cases.