Antitrust Antipathy

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No sooner are you getting broken up than you’re getting broken up anew.

AT&T, facing antitrust troubles, famously split itself into smaller companies in 1984. Today, AT&T is running into antitrust issues once again as it seeks to take over T-Mobile USA. The feds fear that a combination of the second- and fourth-largest U.S. cellphone companies would undermine competition and cause prices to rise.

[EXPAND More] “While some observers said AT&T and the government might still reach a settlement,” The Wall Street Journal reported today, “others said the fundamental nature of the Justice Department’s objections would set a high hurdle.”

Peter Drucker wrote quite a lot about antitrust law. Rarely was he quite so succinct about it as in a 2000 interview with Business 2.0 magazine, during which he was asked about the antitrust case against Microsoft. “Antitrust is an obsession of American lawyers, but I have no use for it,” Drucker said. “I am not afraid of monopolies because they eventually collapse. Thucydides wrote years ago that hegemony kills itself. A power that has hegemony always becomes arrogant.”

In The Frontiers of Management, Drucker offered a longer explanation of his skepticism, noting that antitrust laws didn’t prevent economic concentration, merely changed the form it took. “In terms of concentration of economic power, the American economy, despite antitrust, differs very little—and certainly not in statistically significant magnitudes—from any other economy in a similar stage of development, even though most of these others have had no antitrust laws and have certainly not enforced those they had,” Drucker wrote.

Even repealing antitrust laws completely would, in Drucker’s view, “not cause great harm” to the U.S. economy. “The offenses that need to be forbidden—price fixing, discriminatory pricing, discriminatory rebates—are adequately covered by common law, after all, and are adequately dealt with in countries that are totally innocent of antitrust legislation,” Drucker argued. “Still, antitrust is sacred. A proposal to repeal the bans on ‘concentration’ and ‘monopoly’ would have about as much chance of success as a proposal to close all law schools for the next 30 years.”

What do you think: Should AT&T be stopped from taking over T-Mobile USA—or is all this antitrust business overblown?  [/EXPAND]