Antitrust laws are built on nothing but poor reasoning and misguided apprehensions.
No. The only way companies can succeed under free-enterprise rules is by making better offers, not worse ones, to employees, customers, and suppliers. The moment they get “uppity,” if ever they do, and stop providing better goods and services at lower prices, they get smashed down by the logic of the free-enterprise system: the supposed “victims” go elsewhere; new entrepreneurs spring up.
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It does not take too much upstairs to see through the Biden administration’s rejection of the JetBlue-Spirit Airlines merger. The latter is on the verge of bankruptcy. It is $1.1 billion in debt. It faces the headwinds of a new labor agreement raising pilot pay by 34% and has trouble with its Pratt & Whitney engines. JetBlue offered Spirit a $3.8 billion buyout. Together the two of them would account for a 10.5% market share, fifth in this industry.
It is exceedingly difficult to see the logic behind this antitrust refusal, unless it is to protect the market share of the “big four”: Delta (17.7%), American (17.2%), Southwest (16.9%), and United (16.1%).
Nor was this the only recent interference with free enterprise on the part of the Biden administration. Another took place with its kibosh on biotech giant Illumina’s $7.1 billion reacquisition of Grail. These bureaucrats have also put paid to deals between air carriers Alaska and Hawaiian, between grocery chains Kroger and Albertsons, and between amusement park giants Six Flags and Cedar Fair. They have been busy little bees ruining the US economy.
A more important consideration is to ask why we need antitrust law in the first place. After all, the entire ethos of competition is to outdo your rivals in terms of providing consumers with a better and more reliable product at a lower price. The better you perform that task, the larger your base of operations becomes… and the more likely you are to run afoul of antitrust law. Here is a public policy that explicitly, knowingly, and purposefully clamps down on entrepreneurship, profits, earnings, and customer satisfaction, the very ideals of the free-enterprise system.
The Rotten Roots of Antitrust Law
The justifications for this set of laws are several. From an academic point of view, it stems from a diagram in microeconomics which has been crammed down the throats of aspiring economics students for lo these many decades. On the basis of it, four indictments of so-called “monopoly” have emerged.
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