Trust Busting Complexities

To the Editors of The Crimson:

Since antitrust can be both complete and boring. I hesitate in responding to James Star's editorial. "Busting Trusts Sensibly." Thankfully, though, within the tangle are at least two clear principles which might guide out actions. Star affirms one: that firms ought to be held accountable if and only if they engage in unfair conduct, such as price-fixing arrangement or price gouging to monopolize a market. This principle is generally regarded as the basis of our antitrust laws. Hence, the present administration may be praise worthy for adhering to the law and its underlying rationale.

Yet, there is a second principle at stake, which Star interprets as "the simplistic belief that 'bigness is badness.' "Agreed: there are those who simply don't like big business and who would freely use the antitrust laws to enact their views, However, a closer look reveals a large, reliable body of scholarship, which demonstrates the adverse consequences of one of a few firms controlling the bulk of a market--irrespective of their conduct. Ironically, for example, some firms in difficult-to-enter markets gain high profits which are unrelated to superior business practices or R&D. The general idea is that monopoly or oligopoly in their own right, leading as they do to economic waste and relatively large transfers of wealth, may be undesirable from a social standpoints.

American legal history generally supports the priority of the first principle. Yet, there is also a tradition of rulings on grounds of market control as well as unfair conduct. I wish to emphasize that such a tradition is justified by well-respected research; simplistic notions of "bigness as badness" need not enter into it. Such research further implies that new antitrust legislation could legitimately be based on the notion of market power as distinct from conduct (with adequate previsions for exceptions which are too complex and boring to mention here).

Ultimately, of course, our choice of legislation will be subjective. Is it right to break up a highly concentrated industry in the interest of what we call the general welfare? Or are firms entitled, conduct permitting, to capture high profits and produce as (in) efficiently as they will? How are we to decide between these competing claims?

I hope we can agree of disagree on this question, while respecting the intellectual credibility of both principles. Michael Pontrelli '81