Antitrust Law Is Anticonsumer
February 13, 2001
Antitrust policy could tip the long-term economic forecast toward clear skies or severe storms, says a study by the National Taxpayer Union Foundation (NTUF).
Rather than viewing antitrust as a "well-intentioned policy taken to extremes," Mark Schmidt argues that it was never motivated by consumer welfare, and has always been built on a "shaky foundation of ideology, politics, and ambition."
Research shows that antitrust enforcement is neither needed nor beneficial to consumers:
- Far from "harming consumers," in the 10 years before the 1890 Sherman Antitrust Act, the industries accused of being monopolized all lowered their prices faster than the general price level was falling and expanded output faster than Gross National Product was growing -- as much as ten times faster.
- The "primary benefit of mergers to the economy" is their ability to generate cost savings for consumers, says the Department of Justice, but delayed mergers due to antitrust requirements cost $12 billion in 1996 alone, according to economists Robert Ekelund and Mark Thornton.
- The 293 antitrust investigations launched by the Department of Justice Antitrust Division in 1999 reduced investment by a conservatively estimated $10 billion, according to Schmidt.
- The Nasdaq stock market lost $450 billion in market capitalization as a direct result of the antitrust decision against Microsoft, say economists Thomas W. Hazlett and George Bittlingmayer.
Policymakers often confuse the mere existence of temporary economic concentration with a long-term threat to competition when there is none, says Schmidt. For instance, by the time Standard Oil was broken up in 1911, there were 147 independent oil refineries, and Standard's share of total market supply had fallen to 11 percent.
Source: Mark Schmidt, "Antitrust Law: Affirmative Action for Uncompetitive Business," NTUF Policy Paper 132, December 11, 2000, National Taxpayers Union Foundation, 108 N. Alfred Street, Alexandria, Va. 22314,(703) 683-5700.
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