Antitrust Policy of Little Benefit to Consumers
January 21, 2004
In 2000, the Federal Trade Commission (FTC) and the Antitrust Division of the Justice Department (DOJ) spent $146.9 million dollars investigating hundreds of alleged cases of price fixing, market monopolization, and other anticompetitive business activities.
However, researchers from the Brookings Institution suggest that government involvement has largely been ineffective and, in some cases, has done more harm than good for consumers. In surveying landmark cases over the past century, the authors found that:
- Government regulation has generally been unable to achieve lower prices or bring about a significant increase in competition.
- Government oversight of company mergers has been particularly inefficient, in many cases prohibiting productive mergers that increase consumer welfare.
- There is great difficulty in formulating effective remedies for anticompetitive behavior, especially in an era of dynamic competition and rapid technological change.
- Due to the excessive duration of monopolization cases, the market circumstances have often changed dramatically by the time a court decision has been reached.
- Political forces which influence antitrust enforcement have been co-opted by rival companies to gain competitive advantages.
Ultimately, the study concludes that the power of the market is an overlooked force in deterring anti-competitive behavior, and leaves regulators with relatively little to do.
Source: Robert W. Crandall and Clifford Winston (Brookings Institution), "Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence" Journal of Economic Perspectives, Volume 17, Number 4, Fall 2003.
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