Antitrust

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Anti-trust are a set of laws which punish successful companies for being dominant (successful) in their market. The philosophical basis of antitrust laws is the Marxist idea that the free market will result in coercive monopolies that will abuse consumers.

Natural monopolies are beneficial

Natural monopolies may arise in certain industries because of economies of scale. However the returns from increasing size decrease rapidly as the complexity of any given bureaucracy increase. Like many government agencies, large bureaucracies in business can also grow non-responsive to consumer trends, resist efforts to change, foster corruption and waste, and perhaps most importantly, grow stagnant because they fail to innovate. The major difference between public and private bureaucracies is that the invisible hand of the market quickly punishes companies that grow too large for their own good, and rewards small and innovative startups that are able to move quickly, and take the big risks necessary to take advantage of innovations.

Companies like Microsoft and IBM must constantly try to maximize efficiency and spent massive amounts of funds on research to stay ahead in their markets. Microsoft may well have a “natural” monopoly on the Operating System market – but if it fails to constantly improve its products, foresee new trends, and keep its prices down, competitors will quickly eat up its market – and many will argue that competitors like Linux are in the process of doing just that. Furthermore, the fact that Apple and Unix-based operating systems have formed a small but solid niche immune to any “undercutting” efforts by Microsoft – no thanks to the Antitrust Dept. — clearly undermines your argument that abusive monopolists can simply wish competitors out of existence. In any market where there is a monopoly, small competitors are always waiting for the first slip up to jump into the market.

The biggest abusive, corrupt, and inefficient monopolies are socialist and state-enforced industries - like the U.S. Post Service, Amtrak, the old AT&T, and the Federal Reserve.

The government is the primary cause of coercive monopolies

Unfortunately, the major barrier to competition and sustainer of monopolies is not private companies but the government. For example, cable companies, a common villain, are only able to maintain monopolies because the FCC makes it illegal for new competitors to enter the market without essentially bribing politicians into giving them a license (permission) to do business. On the local level, they have made deals with cities giving them a legal monopoly over the local market. Rather than increasing competition, the Antitrust Department is actually used as a tool by jealous competitors to force better and more efficient companies to compete in the courts rather than in the market. The only constant of the arbitrary rules used by the DOJ is that any successful business can be punished at any time for just about anything. When companies charge prices lower than their competitors, they are accused of “predatory behavior,” when they charge prices that are higher, they are fined for “gouging,” and when they match their competitions, they are accused of “collusion.” Some want the government should nationalize the communications market just like it nationalized the roads. They forget that like all other monopolies that only exist because of a politicians favor, this would form yet another gang that fines and imprisons inventors and entrepreneurs who try to introduce cheaper and better products.

Quote

The alleged purpose of the Antitrust laws was to protect competition; that purpose was based on the socialistic fallacy that a free, unregulated market will inevitably lead to the establishment of coercive monopolies. But, in fact, no coercive monopoly has ever been or ever can be established by means of free trade on a free market. Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action...The Antitrust laws were the classic example of a moral inversion prevalent in the history: an example of the victims, the businessmen, taking the blame for the evils caused by government, and the government using its own guilt as a justification for acquiring wider powers, on the pretext of "correcting" the evils.
-- Ayn Rand "Antitrust: The Rule of Unreason" Voice of Reason