Author(s)
Source
Forbes.com, May 18, 2009
Summary
This article looks at antitrust enforcement under the Obama administration, mentioning Intel and Qualcomm.
Policy Relevance
More aggressive antitrust enforcement is likely to harm consumers and innovation.
Main Points
- In 2009, the European Commission (EC) fined Intel, even though Intel’s actions resulted in consumers paying lower prices for microprocessors.
- Intel’s rival, AMD, had complained that Intel’s prices were too low for AMD to compete, and that consumers would have faced higher prices in future.
- The microprocessor market is vigorously competitive, with prices falling and innovation up. AMD’s profits have also risen. Firms trying to keep up with rivals often offer discounts. The EC’s competition decision was wrong.
- Some see the EC approach as a form of protectionism aimed at successful US firms like Microsoft, Intel, and Qualcomm.
- U.S. antitrust enforcement agencies at the Federal Trade Commission (FTC) and the Department of Justice (DOJ) seem likely to follow mistaken policies as well.
- Until 2009, U.S. regulators usually looked for proof that a firm’s actions had harmed consumers before acting.
- But in 2009, the Department of Justice announced that large firms would be subjected to closer antitrust scrutiny, withdrawing an earlier report calling for restraint.
- Intuition and guesswork may take precedence over evidence and proof.
- Competing firms will complain to regulators in the hope of a bailout.
- The FTC’s investigation of Intel offers an example of the new, mistaken policy.
- It is very difficult to identify the few cases in which low prices end up harming consumers. Errors are likely to have far-reaching economic consequences.