Sunday, July 26, 2009

Who Do You Antitrust, Baby?

Stephen Labaton's front pager on the Sunday NY Times details the Obama administration's efforts to actually investigate and move on the massive backlog of antitrust complaints from the Bush era. Naturally, after that section of the Justice Department being all but mothballed for years, the protests from both the business community and those who represent their interests in Washington are that once again, Obama's DoJ is doing too much too soon.
The more aggressive antitrust policy was described in interviews with officials at the White House, the Justice Department, other agencies and Congress. It is a major policy reversal from the Bush administration, which did not prosecute cases in which some dominant companies engaged in potentially anticompetitive behavior, often because those officials maintained such behavior was not harmful to consumers.

Democrats have spent years trying to gain the support of businesses, and the policy changes under way may have long-term political implications for their party. Some companies would like to see more aggressive antitrust enforcement against their rivals, while others could be hurt by it.

In some cases, though, the new approach is being opposed by administration officials. Some fear that the crackdown is coming at a bad time, as corporate America reels from the recession. Other officials embrace the Bush administration’s view that larger companies and industry alliances can provide consumer benefits by making their businesses more efficient.
Note the warnings and the argument here: Democrats are going to hurt themselves "long-term" and larger businesses with alliances between competitors are more efficient and better for the consumer.

Isn't that second argument completely rejected by conservatives when it comes to health care, public services, education, and other government functions as the reasons why government cannot do the job? I mean, aren't we saying here that it's alright for a bloated, huge monopoly or oligopoly to run anything as long as there's a profit motive involved? Is that the only thing that matters in the end?
One clash played out recently when the Transportation Department, rejecting many of Ms. Varney’s recommendations, approved an antitrust immunity request involving a global alliance of nine airlines; Continental Airlines wanted to join the alliance to share routes, marketing and revenue.

The antitrust division argued the immunity was unnecessary for approving the newly reconstituted alliance and that it could lead to rates rising from 6 to 15 percent for many routes, according to public filings. The Transportation Department rejected that analysis for most of the routes and instead endorsed a policy popular during the Bush administration that favored such industry agreements out of a desire for efficiency.

The disagreement became so heated that the president’s chief economic adviser, Lawrence H. Summers, was called in to mediate.

Administration officials said that Mr. Summers did not take sides in the dispute but urged the two agencies to reach an agreement as they sought to balance the interests of the industry against those of consumers.

In a second area, senior Democrats are proposing legislation to eliminate an exemption from antitrust law for commercial railroad companies. It would give the antitrust division the authority to scrutinize the railroads for anticompetitive practices.

The proposal, by Senator Herbert Kohl of Wisconsin, who heads the antitrust subcommittee, and Senator John D. Rockefeller IV of West Virginia, the chairman of the Senate Commerce Committee, has been sought by a coalition of railroad shippers. But so far the administration has not taken a position on the measure.

In a third area, a White House effort to overhaul financial regulation, officials weighed but rejected a significant antitrust role as a way to reduce the size of large companies considered too big to be allowed to fail.

“The struggles between the expert agencies and the Justice Department get to the heart and soul of exactly what the competition policy of the Obama administration will be,” said Mark Cooper, an antitrust expert and director of research at the Consumer Federation of America, an advocacy group.

He added: “Now you have an antitrust division that cares about competition, and it is running up against the expert agencies that haven’t changed their attitudes yet.
Six months hasn't changed the prevailing attitudes in the rank and file levels of our federal cabinet bureaucracy yet. Everyone's got their own little fiefdom to protect and billions of dollars to guard. Antitrust is only a nuisance in the age of multinationals...unless you can use it to break your competition. Actually using it to benefit the consumer instead of the corporations who donate the big bucks? What kind of silly idealists in the Obama DoJ are there, anyway? Too Big To Fail doesn't just mean banks, you know.

It means everything. We have a government full of people who believe their job is to do nothing. No oversight, no regulation, no interference, no checks, no anything. Let the businesses do what they want and the consequences be damned.

Just like the banks in 2008. What could go wrong? The free markets know best, right?

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