Antitrust Laws

After much research and investigations on Antitrust Laws, and reading up on individual cases, I think that overall Antitrust Laws are effective and good for the people. Without the Sherman, Clayton, and Federal Trade Commission Act, there would be a monopoly of every industry, trade, marketing, and services. This would in-turn lead to higher prices for the consumer, lower quality products, less innovation, and poor service. As I mentioned in my opening sentence, I will bring up two individual cases that the DOJ (Department of Justice) is pursuing when it comes to Antitrust Laws.

I would like to begin by quoting the DOJ’s mission statement.
Mission
“The mission of the Antitrust Division is to promote economic competition through enforcing and providing guidance on antitrust laws and principles.
Antitrust Laws
The goal of the antitrust laws is to protect economic freedom and opportunity by promoting free and fair competition in the marketplace.
Competition in a free market benefits American consumers through lower prices, better quality and greater choice. Competition provides businesses the opportunity to compete on price and quality, in an open market and on a level playing field, unhampered by anticompetitive restraints. Competition also tests and hardens American companies at home, the better to succeed abroad.
Federal antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade, such as price-fixing conspiracies, corporate mergers likely to reduce the competitive vigor of particular markets, and predatory acts designed to achieve or maintain monopoly power.” http://www.justice.gov/atr/about/mission.html

Although I would mostly agree with the Antitrust Laws, the two cases which I will bring up are ironically a contradiction to it. The first case I would like to bring to light is the DOJ vs the American Airlines/ US Airways merger. American Airlines has just recently come out of chapter 11 bankruptcy and is seeking a merger with US Airways. Even though technically both companies can survive solo, the merger would mean more routes for passengers and lower cost airfares. There has been numerous mergers of Airline companies over the years so such a proposal would seem to be a smooth transition right? “Not expecting DOJ to object was a reasonable position considering DOJ had in recent years signed off on mergers between
Delta Air Lines and Northwest Airlines, United Airlines and Continental Airlines, and Southwest Airlines and AirTran Airways, but DOJ's 56-page lawsuit revealed that the department may be having second thoughts about those approvals.
"Increasing consolidation among large airlines has hurt passengers," it stated.” “Joe Sims, American Airlines lawyer noted it is "technically true" the airlines will survive without the merger, as DOJ contended in its lawsuit. But he added that consideration is irrelevant to the case. The key, he said, is not the airlines' survival, but whether the carriers can prove to the court the merger will enable the new American to be more competitive against rivals such as Delta and United than either US Airways or American can be on a standalone basis.” http://www.atwonline.com Why is the DOJ targeting a company such as US Airway that’s struggling to stay in business when it was not a problem with those other Airline companies?
I hope that it is a matter of protecting the American consumers, and not any other benign means of making profit. If the DOJ somehow forces this merger not to happen, how will that affect the mergers that have already happened? Is it ethical for the DOJ to take such actions against American Airlines?

Another case I would like to bring to light is the DOJ vs Apple and five other major publishers of e-books. Three of the five publishers have already settled in court. The case involved cooperation of these five publishers with the help of Apple to jack up the prices of e-books. Instead of acquisitions and mergers into a giant e-book monopoly, these smaller companies would not have to snuggle up to Apple to compete against Amazon and have these lawsuits on their hands. As a result of adhering to Federal and State Antitrust laws, these publishing companies are being punished for conspiring to compete against the e-book monopoly that is Amazon. “Until the Apple iPad came onto the scene led to Amazon’s market dominance. Pricing its e-books significantly below its costs contributed to its near monopoly as well.
Such pricing schemes could be considered predatory under antitrust law. Yet, the DOJ did not bring such a case against Amazon. Nor did the agency try to curb Amazon’s monopolistic power over the e-book market at the height of the company’s dominance. Instead, the agency decided to pursue the less powerful publishers.” http://www.forbes.com/sites/michaelbobelian/2012/04/12/the-irony-of-the-governments-antitrust-case-against-apple-and-five-publishers/

Funny how the DOJ picks and chooses which companies it wants to go after. I am curious to know about the DOJ’s payroll and wages and if that kind of information is transparent and open for public viewing and scrutiny. I like what they stand for, but are they really there for the consumers’ interest or their own interest?

References

http://www.atwonline.com

http://www.forbes.com/sites/michaelbobelian/2012/04/12/the-irony-of-the-governments-antitrust-case-against-apple-and-five-publishers/

http://www.justice.gov/atr/about/mission.html