Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Monday, December 6, 2004

Response to John Kay's antitrust comment (posted Friday)

From today's Financial Times, the following comments by Frances B. Smith, Executive Director, Consumer Alert in Washington D.C.:

"In markets where companies are operating at the "economic frontier" regulators are not very good at understanding novel practices - creative ways of restructuring traditional activities and distribution systems. Those innovations, both technological and institutional, can benefit consumers by lowering prices and increasing choices and convenience.

"Instead, antitrust enforcers assume that the future will be static rather than dynamic. In fact, government antitrust action may hold back innovation.

"It is useful to recall that 1936 anti-chain store legislation was directed toward the Great Atlantic & Pacific Tea Company (A&P) and its potential to take over the retail food market. The Federal Trade Commission in 1977, fearing that Sears, Roebuck would dominate the retail world of the future, issued a consent agreement that restricted Sears' ability to locate its stores in shopping malls.

"Antitrust regulators usually narrowly redefine markets rather than considering the larger field in which the sector is operating. Computers and operating systems are one such example. US antitrust regulators also redefined markets involving "mega-office products discount stores" without considering catalogues and e-commerce sites offering those same products. "

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