Trusting Antitrust Laws

After extensively learning about monopolies and oligopolies and how they operate, antitrust laws finally came into discussion this week. They are laws that regulate oligopolies and prevent them from becoming monopolies.

Some of the things antitrust laws look at are conspiring to restrict competition, price discrimination, tying arrangements, requirements contracts, territorial confinement, and exclusive dealings. The biggest issues in antitrust are resale price maintenance, which is an agreement between the manufacturer and distributor on the resale price (the temptation will always be to set the price at the monopoly level) and predatory pricing, setting a low price to drive competitors out of business with the intent to establish a future monopoly. They also look at tying arrangements, which are agreements to sell one product only if the buyer agrees to buy another, different product.

This leads me to the example we got in class about the United States v. Microsoft. In this case, the US argued that there was monopoly power in the PC operating system, meaning there was no alternative to Windows. They claimed tying arrangement were used to get a monopoly on web browsers. If you bought Windows, you got Internet Explorer. The government said this and other anticompetitive practices were used. On the flip side, Microsoft claimed that the operating system and web browser were actually a single product. Since Microsoft lost, we now have more browser options and Apple has definitely risen up as well in the world of computers.

Since Microsoft’s actions were put under scrutiny, I found myself wondering the same thing another classmate brought up, how does Walmart get away with it? Our teacher made it clear Walmart and other stores, in contradiction to our textbook’s information, actually do practice predatory pricing and definitely engage in anticompetitive practices, establishing themselves as clear monopolies on a local scale. So this means they slide under the radar? I did some research and read an article titled “Is Walmart a Monopoly?” by Robert Feinman. He dubs Walmart, along with Major League Baseball, a “monopsony.” To him, this means it becomes the single buyer in a markert and an effective monopoly on local levels. He claims that instead of overcharging customers, the produce at economic distortions by under paying suppliers.

While the term “monopsony” is a strange new unofficial concept to me, it did make me wonder if we need to perhaps broaden the rules a little so that companies such as Walmart should not be able to thrive while they clearly show signs of anticompetitive behavior.