The Antitrust Craze

by | Sep 9, 2000

Most of us can name no more than a dozen antitrust prosecutions under the Clinton Administration. However, since 1994, the Department of Justice has filed over 500 antitrust suits against American companies. The majority of suits went unnoticed, and only a select few made it to the headlines. The prosecuted companies ranged from scuba manufacturers […]

Most of us can name no more than a dozen antitrust prosecutions under the Clinton Administration. However, since 1994, the Department of Justice has filed over 500 antitrust suits against American companies. The majority of suits went unnoticed, and only a select few made it to the headlines. The prosecuted companies ranged from scuba manufacturers to software producers; from oil multinationals to local ski resorts; from bakeries to mills; from flower retailers to airline carriers; from explosive suppliers to pharmaceutical enterprises. No line of business seems to have been spared.

Some of these companies were accused of practicing “monopolistic” prices that were too high. Others were charged with practicing “predatory” prices that were too low. Still others were accused of “fixing” prices that were too similar.

Some companies were condemned for having too big a market share, and others for trying to get one. A great number of companies were denied permission to merge and expand. Many others were denied permission to associate and trade.

Underlying and supporting antitrust law is the idea that the state has the right, the responsibility, and the wisdom to regulate how companies and markets operate. This idea is supported by the belief that, if left in freedom, successful companies would harm their competition and exploit their consumers at will. This idea is false, and this belief, misguided.

Once upon a time in America, people were free and government acted by permission. Today the roles are reversed. We seem to have forgotten that our Declaration of Independence clearly states that the purpose of instituting a government is to secure the rights to “Life, Liberty and the Pursuit of Happiness.” This means that government exists to secure for individuals the freedom to act in the pursuit of their values. America was founded on the principle that an individual has the right to run his life, which includes the right to run his business: to set his prices at whatever level he wishes; to gain as many customers as he is capable of; to merge, to associate or to trade with whomever he chooses; to succeed to the best of his ability.

The government should have no right to impose its will on businesses because it should have no right to impose its will on individuals. No violation of rights is good or can be justified. Antitrust law is fundamentally incompatible with individual rights because it denies individuals their right to run their businesses as they judge best.

The government should have no responsibility to regulate businesses’ policies for the same reason it should have no responsibility to regulate individuals’ policies. Just as the life of each individual is his own responsibility, so the running of each business should be solely its owners’ responsibility.

The people best qualified to judge products and their prices are none other than its producers and consumers. It is a huge mistake to think that Washington bureaucrats are wise enough or better equipped than other people to make such judgments. In a free market, prices are agreed to by both parts of any deal. There is no sale without a consenting buyer, and no merger without a consenting partner. In a free market, market share has to be earned. Even if a producer were to temporarily hold a whole market, he would not be able to set his prices at will. If he set prices too high, people would replace his product for other ones. If his product were too essential and could not be replaced, other producers would readily jump into his market to take advantage of the high profit margins, and of the high product demand. Of course, in many situations, companies that hold significant market shares have great advantages over start-ups. The important thing to keep in mind is that they earned whatever advantages they possess.

There are no benefits to be had from government forceful interventions in the market. No benefits can be gained from the violation of rights and the destruction of freedom. No benefits for consumers can follow from an attack on the producers that serve them.

Antitrust laws do not promote or protect free competition — they violate it. Instead of leaving producers free to make their own choices and follow their own decisions, antitrust laws dictate to them what they should do. Antitrust laws do not preserve freedom — they erode it. And in eroding the freedom of the most successful producers they erode the freedom of us all.

True competition can only exist in freedom and under the full protection of individual rights. It is time to reject the antitrust laws along with the false premises at their foundation, and embrace a truly free market that is indispensable to our progress and prosperity.

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David Holcberg, a former civil engineer and businessman, is now a writer living in Southern California. He is a former writer for the Ayn Rand Institute in Irvine, Calif. The Institute promotes the philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead.

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