Modest Proposal Regarding Oligopolies
Posted on March 25, 2016
It is impossible to reverse oligarchical rule without resurrecting antimonopoly law. Here is a modest proposal:
it should be illegal for any company with over 25% of the revenues in any major national market to acquire or merge or enter into marketing agreements with or acquire patents from any other company with any sales or anticipated sales in that market.
Of course there are 2 difficulties:
1. enforcement
2. defining major markets.
The FTC should have power to define major markets, based on detailed criteria in the law. One criterion should state that all sales belong to at least one major market. It should also have joint enforcement power with DOJ, just as today.
However the FTC won’t get around to it until forced. So the main enforcement should consist in a right of competitors to sue. Moreover if there is no defined major market, the competitor should have first crack at market definition. Moreover, any would-be mergerer that loses a suit should pay all lawyer’s fees plus interest–but not vice versa. That is, the presumption should be against mergers and acquisitions.
Granted this will lead to a reduction in incentive for high tech innovators. The most important game plan for high tech startups these days looks like this: invent a new bell or whistle, show proof of concept, then sell it to the most relevant monopolist, who will either suppress it or add it to their offerings and improve their monopoly position. In other words, the foregone incentive is mostly tied to anti-social outcomes. On the other hand there will be an improved inventive to sell to feisty smaller competitors who sharpen competition.
I also grant that patent and intellectual property right (IPR) law for high tech is a mess and that IPRs can’t be enforced without creating a impenetrable thicket of related IPRs, which this proposal would interfere with. I for one am not a fan of existing IPR law. Keep in mind that an IP right is nothing other than a legal monopoly. But sorting that out would require a different, and longer, post.