Competition and the Importance of Anti-Trust Laws for Americans
Three of examples of monopoly behaviors that impact consumers.
Editors note: This is part one of a two part series that examines the renewed academic interest in anti-trust. This first article focuses on the traditional anti-trust issue of price increases by large companies that control competition at the expense of consumers. Periodically Latin Business Today shares topical views by its contributors, this piece soley represents the view of the author.
Does American public policy need to again adopt the Robber Baron Era’s anti-trust actions to protect consumers, entrepreneurship, our economy and environment?
That question is now surfacing in economic and legal academia. It is being driven by growing evidence that large companies are increasing prices because they have market power over consumers.
How To Define Monopoly or Oligopoly Business Behavior
Monopoly and oligopoly behavior was defined during the Robber Baron Era by the evidence of a company, or a collusion of companies, using their size to economically harm consumers, suppliers and competition.
Ask today’s consumers if they see any such evidence of monopoly or oligopoly behavior and they are likely to sight these three of examples:
All the big banks have increased their number of fees and fee amounts over the last several years. Overdraft fees now account for over 8% of the banking industry’s revenues. ATM fees for withdrawals from a non-customer bank have increased every year for the last ten years. Is it just a coincidence that there is no regulation over ATM fees?
First there were no baggage fees. Then one airline instituted baggage fees and now all airlines but one have baggage fees. Just recently an airline raised their baggage fee and within 24-48 hours most other airlines followed suit. Are airlines colluding to raise baggage fees? Are they using additional fees to increase ticket pricing complexity for consumers seeking to buy the lowest fare?
Generic Drug Price Increases.
It appears that almost weekly we read about yet another dramatically large generic drug price increase. The most egregious price increases have been 4 to 10 times higher for drugs that have been made in the same factory for years if not decades. A recent survey of medical professionals reported that 75% point to industry consolidations as a driving factor that is limiting drug pricing competition and raising drug prices.
These types of price increases have stirred legal and economic academia to question why existing anti-trust laws are not being enforced when there appears to be evidence of monopolistic or oligopolistic pricing behaviors?
This question, plus the potential for mega-sized digital platforms like Amazon to manipulate consumer decision making, is the focus for the second part of this article series on the importance of anti-trust to Americans.
Part two of this two part series will explore new territory for anti-trust investigations and whether the disproportionally large scale of corporate lobbying is achieving market powers that enables unfair price increases.
And it will explore a new 21st century anti-trust question over mega-sized digital platforms like Amazon’s are being used to unfairly bias consumer decision making.