Competition restored? When companies must undo a merger.
Company A acquires Company B. Two years pass. An FTC administrative law judge decides the merger was bad for consumers 鈥� largely based on the testimony of 鈥渆xperts鈥� who happen to be FTC employees. He says the merger should be undone. By restoring the market to its earlier state, things will be better.
That鈥檚 not the end of the story. Company A can appeal. And if they win their appeal, the FTC can appeal. And so on and so on. Eventually, six or seven years may elapse before the merger is undone and the market 鈥渞estored鈥� to its earlier form. This system, we鈥檙e told, is far superior to a free market, where there would be no FTC to challenge private mergers in the first place.
This is a . The details are largely irrelevant. It all comes down to a simple question: Is 鈥渃ompetition鈥� a static condition or a dynamic process? The FTC thinks it鈥檚 the former, that competition is like a fixed point on the time-space continuum that can be 鈥渞estored鈥� to prevent change. Certainly, it鈥檚 easier for government agencies to plan the economy this way: Just identify the point in time where 鈥渃ompetition鈥� was at its greatest level, then use the authority of the state to fix the industry鈥檚 structure accordingly. No mess, no fuss.
------------------------------
海角大神 has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.
