News Release

June 28, 2001

Antitrust is anti-consumer, new study finds
Frowned-upon business practices may be beneficial to consumers, competition

WASHINGTON-General Electric's merger with Honeywell International is under scrutiny-and possibly the ax-as the European Union questions its effect on consumers. Regulators there are afraid that a combined GE-Honeywell would stifle competition. But what some consider to be the most nefarious of business practices may actually benefit consumers, according to a new Cato Institute study.

In "The Antitrust Terrible 10: Why the Most Reviled 'Anti-competitive' Business Practices Can Benefit Consumers in the New Economy," Cato scholar Clyde Wayne Crews Jr. challenges the almost universally accepted notion that antitrust law is in the public interest and benefits consumers.

"Antitrust is vulnerable to exploitation," Crews argues, "both by firms hoping to hobble competition and by a public and private legal infrastructure that lives comfortably off the industry created by enforcement of antitrust laws." And, he says, it is consumers who pick up the tab.

Crews sifts through the gamut of allegedly harmful business practices-from mergers and collusion to predatory pricing, price discrimination and exclusive dealing-and shows how they can in fact benefit consumers.

"Many of the practices disparaged by antitrust regulation and targeted by enforcers," Crews writes, "are in fact good for both competition and consumers-albeit bad for competitors."

For example, consumers and regulators who worry that mergers will result in higher prices "should raise a suspicious eye when merging firms' direct competitors object," Crews writes. "Rivals' protests can be a tip-off of a merger's efficiency rather than anticompetitive effects."

"Better, more economically astute enforcers are not the answer," Crews concludes. "The problem lies with the fundamental rejection of property rights and contracts inherent in antitrust law and its flawed view of markets and human interaction."

"The Antitrust Terrible 10: Why the Most Reviled 'Anti-competitive' Business Practices Can Benefit Consumers in the New Economy"

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