It’s difficult to reconcile the American concept of “equal justice under law” with the Federal Trade Commission’s motto, “Protecting America’s Consumers.” The implication is that there is one set of laws for consumers and another set—affording lesser protection—for producers and sellers. This conflict presents itself in all “consumer protection” laws, and it stems from an awkward premise: That in any given economic exchange, the party trading cash holds the legal and moral high ground over the party trading a good or service.

Put another way, try to fashion a consumer protection or antitrust law in a purely barter economy. If A trades two pounds of flour to B in exchange for a bushel of apples, which party is the “consumer” entitled to government protection? It’s easy to apply common law principles regarding fraud to such a transaction, but virtually impossible to employ contemporary consumer protection standards, which require a presumption that one trader is good and the other is bad.

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Filed under: antitrust

Last week the Federal Trade Commission and the Justice Department’s Antitrust Division issued their annual report on the Hart-Scott-Rodino Act (HSR Act), which requires companies to pre-report mergers over a certain value to antitrust regulators so they can preemptively determine if a deal is “likely to have an anticompetitive impact.” (It’s amazing that people with such amazing economic forecasting abilities are employed as mere government lawyers.)

Despite the occasional high-profile merger challenge, like the FTC’s recent lawsuit to stop Whole Foods from acquiring Wild Oats, very few deals face antitrust roadblocks. In the fiscal year 2006, the FTC and DOJ issued second requests for information—the first step towards a formal challenge—in only 2.6% of reported mergers. This is slightly below the ten-year average of 3.01%.

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Filed under: antitrust

Common journalistic practice says that a court decision is pro-business when it favors a corporate defendant over a plaintiff. Conservatives are also said to be pro-business while liberals are pro-plaintiff or pro-consumer. This is how the press frames most discussions of tort and regulatory litigation.

In the last Supreme Court term, a 5-4 decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc. was hailed and condemned (depending on who you ask) as a pro-business decision. The conservative majority, led by Justice Kennedy, overruled a 1911 precedent that condemned “resale price maintenance” (RPM)—contracts where a manufacturer conditions sales to distributors on setting a specific retail price—as an automatic violation of the Sherman Act. Most antitrust challenges are subject to the rule of reason, and after years of complaints from mainstream economists, the Leegin majority acquiesced in ending RPM’s special status under the “per se” rule.

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Filed under: antitrust