3.8.05

Do Antitrust Laws Protect Consumers?

Many people think that antitrust laws are in place to protect consumers. But as Microsoft's current troubles in Europe show, that isn't necessarily so.

The European Commission is using antitrust to carve out a market share for RealNetworks Inc., Microsoft's main rival in media-player software. And the EC is going to extreme lengths to do so, requiring Microsoft to sell a stripped-down version of its Windows software that doesn't contain Windows Media Player.

Microsoft has complied, but it wanted to name its new Windows version, "Windows XP Reduced Media Edition" ("Microsoft, EU Agree on Slimmer Version of Windows System," Wall Street Journal, March 29, 2005.) The EC refused, saying that the name would discourage sales and mislead customers. It didn't say how exactly putting the label "reduced media" on something that had fewer media features would mislead consumers. It was obvious, though, how it would discourage sales. Why buy a Ford without a radio when you can get a Ford with a radio at the same price?

(...)

The best statement of the philosophical case against antitrust is in philosopher Harry Binswanger's essay, "Antitrust: 'Free Competition' at Gunpoint." Binswanger draws a fundamental distinction between economic power and political power. Economic power, he notes, is simply the power to produce and trade, whereas political power is the power of the government and necessarily rests on the use of force or threat of force. Someone can earn a large market share, even, in rare cases, a 100% market share, without ever coercing anyone. That person creates power simply through his productivity and does not forcibly take anything away from anybody; therefore, he should not be persecuted.