Put a Lid on Antitrust Zealots: Pieler Deseret News Op-Ed

Published in the Deseret News (Salt Lake City, UT) <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />

Distributed by Scripps Howard News Service

October 12, 2000


Nothing is sadder to watch than bureaucrats entrusted with an obsolete set of rules and regulations, trying desperately to catch up with economic, technological and political changes that make them fossilized relics of an ancient era. That's what is going on with antitrust laws and regulations in the age of the Internet as companies and whole industries assemble, deconstruct and redefine themselves to suit a global marketplace evolving at full warp speed. It's a futile effort for government, like racing to stop a bullet that's already headed for the target.


The Microsoft case was supposed to be the bellwether for the “New Antitrust Era” envisioned by Clinton-Reno antitrust chief Joel Klein and his fellow regulators, both at the state level and abroad. The Supreme Court has thrown further doubt on the Microsoft breakup plan by declining to take the case on expedited appeal, insisting on “regular order” in the Court of Appeals. The War on Microsoft isn't over, but a government victory is no longer a foregone conclusion.


Meanwhile, the international campaign to use old antitrust rules to thwart New Economy combinations of goods, services and markets continues unabated. From WorldCom/Sprint (blocked in both the United States and Europe) to AOL/Time Warner (European authorities halting the EMI/Warner Music part of the deal as the minimum price of even considering approval) to–get this–Web-based consumer and business-to-business purchasing cooperatives like the automakers' Covisint site, the global regulators are out in force. They are maneuvering to both revive antitrust as a regulatory weapon and elevate it to the global tool of choice for government officials eager to regulate the life out of the economy.


From its origins as a competition-enhancing force mediation, antitrust is being transformed into an aggressive instrument of government expansion. As Joel Klein puts it, “The only legitimate form of government intervention will be antitrust intervention.”


James Gattuso of the Competitive Enterprise Institute points out that the European Union wants to drag in the World Trade Organization and create global guidelines for antitrust. Is there a market justification for any of this antitrust overreach? It's hard to see one, given that the antitrust laws are a legacy of the late 19th century industrial era, when there were high barriers to entry for most lines of business; limited global movement of goods, services and capital; and severe geographic limits on the ability of consumers to access a diverse array of competitors. None of that is true today, with cost barriers to entry in cyberspace near zero; instant Web access to goods, services and information that we could only dream about just a few years ago; and new startups every day creating new market niches and entire markets with unlimited potential.


The bureaucratic instinct for survival and indeed expansion in face of threatened obsolescence is indeed a kind of market miracle in itself. But surely our political leaders have enough common sense not to kill today's economic miracle with so blunt a weapon as antitrust.


George Pieler is director of the IPI Center for Education Freedom and formerly served with the legal division of the Federal Reserve


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