海角大神

Miami Heat player Dwayne Wade becomes a free agent on July 1. So does LeBron James of the Cleveland Cavaliers, Joe Johnson of the Atlanta Hawks, and Chris Bosh of the Toronto Raptors. The four men are the cream of the 2010 NBA free agent crop. And according to Wade (via the ), they plan to consult one another about their decisions on where to sign:

Wade said he鈥檚 not sure when the top free agents will discuss their respective plans, though they have spoken informally in the past.

鈥�(Free agency) has been three years coming,鈥� Wade said. 鈥淲e鈥檝e discussed it prematurely, at different times. (But) you don鈥檛 know what guys are thinking and where they鈥檙e going. I think we鈥檒l all sit down, and before one of us makes a decision, all of us will have spoken to each other and (listened to the) thinking.

鈥淎 lot of decisions (will be based on) what other players are willing to do and what other guys want to do. So it鈥檚 not just a 鈥榤e鈥� situation here. We all have to look and see what each other is thinking.鈥�

There鈥檚 nothing remarkable about Wade鈥檚 statements 鈥� except that he鈥檚 admitting to a felony punishable by a $1 million fine and ten years imprisonment. That鈥檚 the 鈥渕ax contract鈥� for price fixing these days. And what Wade describes is in fact an illegal price-fixing cartel.

Scoff if you will, but if four firms in any industry meet to discuss what customers they plan to negotiate with, the Justice Department and the FBI will come barging in with guns blazing. Heck, as former Congressman Tom Campbell once told a House committee, if 鈥渢hree eye doctors in Elgin, Illinois鈥� have lunch to discuss a proposed HMO contract, they鈥檒l get a letter from the Federal Trade Commission advising them that said lunch violated the Sherman Act.

Campbell was not exaggerating. The FTC has prosecuted over 18,000 physicians during the past decade for essentially doing what Dwayne Wade wants to do with his fellow All-Star players 鈥� sit down and discuss potential contract offers. Former Commissioner Thomas Leary explained that it was illegal for physicians to even discuss their contract situations with one another because, 鈥淭heir prime focus is on using negotiations and contracts for the purpose of enhancing their bargaining power.鈥� And that would be a bad thing in Antitrust World; sellers are never allowed to improve their bargaining power without the federal government鈥檚 consent.

Most 鈥減rice fixing鈥� cartels are in fact little more then discussions. There are no contracts, as those would be unenforceable in government courts. An exchange of information 鈥� what contracts do you plan to bid on, what do prices do you expect to charge next year, etc. 鈥� can be mutually beneficial to 鈥渃ompeting鈥� firms without the need for more formal arrangements. As Wade said, 鈥淎 lot of decisions (will be based on) what other players are willing to do and what other guys want to do 鈥� We all have to look and see what each other is thinking.鈥�

Again, there鈥檚 nothing controversial in Wade鈥檚 statement. But contrast it with a issued by the Justice Department鈥檚 Antitrust Division announcing a coerced guilty plea from an Iowa concrete executive, Kent Stewart:

According to the charge, Stewart participated in a conspiracy in which he engaged in discussions concerning project bids for sales of ready-mix concrete in Iowa, submitted rigged bids at collusive and noncompetitive prices and accepted payment for sales of ready-mix concrete at collusive and noncompetitive prices.

Now how would this differ from Wade, LeBron James, and Chris Bosh having a discussion, agreeing they鈥檒l all sign with the Chicago Bulls 鈥� or maybe Bosh agrees to sign with a Western Conference team so as not to compete directly against Wade and James in Chicago 鈥� and refusing to entertain offers from any other teams? This would be a case where the market participants (a) engaged in discussions concerning bids from NBA teams, (b) submitting rigged bids at 鈥渃ollusive and noncompetitive prices,鈥� and ultimately (c) accepting contracts at said prices.

And although price fixing is a per se antitrust violation 鈥� meaning it鈥檚 unnecessary to show there鈥檚 any monopoly or exercise of 鈥渕arket power,鈥� as in a merger case 鈥� the antitrust violation is arguably worse in the basketball players鈥� case then in the Stewart case cited above. Stewart colluded on the sale of concrete in Iowa City; that鈥檚 not even interstate commerce. Collusion by three or four NBA All-Stars, however, can fundamentally alter the fortunes of several teams and cities, not to mention the league鈥檚 worldwide business.

Obviously nobody expects the Justice Department to prosecute Wade or his fellow players for violating the Sherman Act. That goes against the 鈥渂usiness model鈥� of the Antitrust Division, which is to prey on individuals, like Kent Stewart, outside the public eye who won鈥檛 mount a defense. Prosecuting NBA players for collusion would bring unwelcome public and press scrutiny. Ideological consistency must yield to preserving the antitrust establishment鈥檚 position in the social structure.

The benefit of Wade鈥檚 remarks is that they reiterate how commonplace 鈥渃ollusion鈥� is within the marketplace 鈥� and how the two are compatible, despite over a century of antitrust propaganda to the contrary. Humans are not interchangeable widgets in a machine; they鈥檙e unique individuals with their own subjective preferences. Economic decisions are not made in a vacuum, or by mathematical formula, but within a series of social relationships. When Wade says, 鈥淲e all have to look and see what each other is thinking,鈥� he鈥檚 describing an essential act of economic calculation.

This equally applies to 鈥渢eams鈥� of individuals, be they a basketball team or a business firm. If one firm chooses to share information with another about its possible business plans, that鈥檚 not a violation of anyone鈥檚 rights or destructive of marketplace competition 鈥� as opposed to the antitrust regulator who imprisons people for sharing information and demands individuals obey a rigid, illogical concept of 鈥渃ompetition.鈥�

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