Monday, January 15, 2007

Monopoly is No Game

From my weekly (AM) radio segment titled "Legal Minute".

We’ve all played Monopoly but in real life, it’s not a game. So what is a monopoly in real life? Some may say Microsoft but, seriously, real life monopolies are concentrations of wealth in the hands of a few. Monopolies negatively impact competition in the marketplace. If we form a monopoly then we are anti-competitive. Without competition, there is no price control. In other words, if we want to buy something under a monopoly, we have to pay the monopolist’s price for it. We would have no choice and no price protection. Monopolies also lead to sluggish markets and a loss of entrepreneurship and innovation. Congress passed the anti-monopoly law over 100 years ago. The U.S. Constitution applies that law to all business in all states. The problem these days, is how do we identify what sort of conduct by businesses might lead to a monopoly? Federal agencies are hosting public hearings this year to discuss how to better identify and enforce anti-competitive conduct. Aggressive pro-consumer programs will come under scrutiny as well as loyalty discounts such as buy 3 get one free offers. One thing is certain, however; there are no “get out of jail free” cards for monopolies.