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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Ilaine who wrote (6978)8/12/2001 1:39:34 PM
From: Don Lloyd  Read Replies (2) of 74559
 
CB -

As a practical matter, antitrust laws are not invoked unless the monopolistic company crosses a line between monopoly through sheer efficiency and monopoly through using methods intended to monopolize, strong-arm tactics like price-fixing and market allocation. ...

Then why are all sorts of mergers and acquisitions routinely rejected? Staples and Officemax? (it might not have been these two exact companies).

The EU rejects mergers to protect European competitors. The US rejects mergers to attempt to ensure that actual competitors exist while justifying the action as being required to keep consumer prices low. Both approaches are flawed. The European flaw is obvious. The US flaw is the assumption that the overall health of the economy and its participants is tied to low consumer prices, no matter how low and no matter how they are achieved. It is not too hard to see that concentrating on consumer prices at the expense of wages and investment returns is a flawed policy.

As you would expect, I also have a contrarian view to most of the rest of your message as well, but I don't have the time to make the arguments at the moment. Suffice it to say that I believe that the combination of self interest and the existence of an overall consumer demand/price curve will normally result in an adequately low consumer price even in the case of a single supplier, without it being too low.

Regards, Don
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