Antitrust Laws have entered the news again, with a recent editorial by New Orleans Saints quarterback Drew Brees discussing the NFL’s legal right to negotiate business contracts as a league instead of separate competing teams (“Saints’ quarterback Drew Brees weighs in on NFL’s Supreme Court case“).
In this case, the contract is an exclusive deal with Reebok to produce and sell official league paraphernalia.
Mr. Brees favors competition over teams that negotiate as one monopoly. But his piece is one of many new Antitrust discussions.
Antitrust made news with Comcast’s proposal to buy NBC Universal from General Electric, a merger, but Comcast is also one of a group of media giants proposing “TV Everywhere.”
TV Everywhere is a plan to bring television shows and movies to computers and devices by a small group of big and established cable, satellite and telephone companies, but only for those that subscribe to both television and high-speed Internet services.
Offering both services as a condition of either service potentially forecloses smaller online video competitors like Apple, Hulu and Vuze that offer only Internet TV.
In December, the Federal Trade Commission filed new Antitrust charges against Intel Corporation, alleging the chip maker uses its dominant market size to incentivize companies like Dell and Gateway to limit their use of chips from rival AMD and limit their use of graphic chips of Nvidia.
Mr. Brees sounds like an economics teacher describing the lore of Antitrust and its long history, which is supposed to promote competition, prevent restraint of trade and attempts to monopolize. The Sherman Antitrust Act remains a part of enforceable federal law even though it dates from 1890.
Enforcement is the Issue
But enforcement has always been the weak link in Antitrust.
Congress decided each case would have peculiar details, so they did not write specific definitions of restraint of trade or attempts to monopolize. Instead, they established a process that has defined the law through case by case enforcement in the courts.
Even though antitrust law allows for private suits, the primary enforcement has been by the Attorney General of the United States, who is a political appointee.
In 1911 in United States vs. the Standard Oil Company of New Jersey, now ExxonMobil, the Federal court found that rebates by a railroad from posted shipping rates negotiated for Standard Oil products was an anticompetitive practice amounting to a restraint of trade, and therefore, illegal.
Now we hear that Intel Corporation has paid rebates for years to pressure Dell Computer and others not to buy AMD chips for their computers.
Intel’s business practices have been the subject of European and Asian investigations, but not much in the United States. That’s because enforcement depends on trends in political fashion.
From the early 1980’s until 2009, antitrust enforcement was out of fashion.
It’s Time to Start Paying Attention to Antitrust
It is too early to tell if the Obama administration will be more serious about antitrust enforcement, but restraint of trade practices are having a more direct effect on consumer budgets than they have for a long time.
Lax enforcement is more obviously expensive than it used to be. As consumers and voters, we should pay more attention.
About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
