Originally published at: https://boingboing.net/2018/07/24/antitrust-parallel-universe.html
…
4 Likes
Dang, that much money would buy the President like a thousand girlfriends!
4 Likes
This isn’t quite right on the terminology/specifics. The European case appears to be about resale price maintenance (“vertical” price fixing, meaining between different levels of distribution), which under U.S. law is treated the same regardless of whether it is maximum (under State Oil. v. Khan) or minimum (under Leegin v. Creative Leather Products). The European case is about minimum vertical price fixing. The Apple case was about minimum horizontal price fixing among the book publishers, though there was also a vertical element due to Apple’s involvement as the facilitator of a conspiracy between the publishers.
Horizontal price fixing between competitors is illegal in the U.S. regardless of whether it is maximum or minimum, and the FTC and DOJ are quite active in criminal prosecution of horizontal price fixing. The difference in Europe and the U.S. has nothing to do with a distinction between maximum or minimum vertical price fixing (since there is no longer any such distinction under U.S. law), but rather is based on differences in U.S. law v. E.U. law on how to treat vertical conduct v. horizontal.
That doesn’t mean that the general tenor of the article is wrong, as there are good reasons to believe the U.S. is too lenient regarding vertical conduct, but it is important to present the distinctions accurately.
1 Like
One more comment - it isn’t accurate to say the U.S. declined to take action against Microsoft; the U.S. DOJ did bring a high-profile monopolization case against Microsoft seeking breakup of the company. The DOJ won at trial but lost on appeal. Maybe there is more that could have been done, or bringing a court case wasn’t “decisive” enough, but it isn’t as if the DOJ completely sat on its hands.
Also I muffed the name of the Leegin case - it was Leegin Creative Leather Products v. PSKS.
1 Like
I’m not going to bother looking it all up now, but I remember an incoming GW Bush ordering the DOJ to drop the Microsoft lawsuit, just like Reagan ordered the DOJ to drop the 14-year IBM antitrust lawsuit 20 years earlier. The rule seems to be that you have to wrap up your antitrust cases in 4 years flat, before a movement conservative can get in. (Pre-Reagan, non-“movement conservatives” in the GOP were not against anti-trust; but they are now a memory.)
What does it all cost? I remember a book about the IBM case, by Richard Thomas Delamarter: “Big Blue: IBM’s Uses and Abuses of Power”. He was an economist on the anti-trust team, whose work showed that IBM had to be enjoying monopoly pricing, because they had a 16% profit margin that lasted decades. The average profit margin for Fortune 500 businesses in America is 8%. Try to charge much more, and competitors willing to take 8% will undercut you…unless they can’t.
So it’s not a huge thing, but a world where most things are sold by oligopolies, which we seem to be rapidly heading for. is a world where 5%-10% of nearly everything is skimmed off the top.
That’s conservative, I think - Big Pharma’s Big Five had averaged a 20% profit margin recently.
1 Like
I wonder what drove the men that toke Standard Oil to court, and won
1 Like
Here’s the full press release of Commissioner Vestager’s statement:
http://europa.eu/rapid/press-release_STATEMENT-18-4665_en.htm
I found this bit interesting:
We also found in the sector inquiry that more than one in ten surveyed retailers experienced cross-border sales restrictions in their distribution agreements. Such restrictions limit their ability to sell online to consumers in other Member States. Specifically, we are looking into concerns that Guess, Nike, Sanrio and Universal Studios are restricting cross-border and online sales of products in distribution agreements. These investigations are ongoing and I will not prejudge their outcome.
I wonder why CNBC didn’t report on that part of her statement?
1 Like
In lay terms the biggest difference between the books case and this is the books involved collusion between competitors to set industry wide prices vs. A specific company setting mandated allowable prices for vendors of their own goods. US law takes the former very seriously and the latter it normally stays out of almost completely, regardless of the price of the goods involved.
1 Like
This topic was automatically closed after 5 days. New replies are no longer allowed.
