Abolish Antitrust To Expand Private Infrastructure And Supply Chains

Policy Abolish Antitrust To Expand Private Infrastructure And Supply Chains Clyde Wayne Crews Jr. Contributor Opinions expressed by Forbes Contributors are their own. Policy director at Competitive Enterprise Institute Following New! Follow this author to stay notified about their latest stories.

Got it! Oct 20, 2022, 10:59am EDT | Share to Facebook Share to Twitter Share to Linkedin At a time of great concern about infrastructure, supply chains, and keeping consumer costs down, we are learning details of a proposed $25 billion merger between food giants Kroger and Albertsons ACI , a business combination already prostrating itself for Federal Trade Commission scrutiny and coming under attack from U. S. Senate progressives.

UNITED STATES – JANUARY 21: The front of the FTC building in Washington, D. C. (Photo By Chris .

. . [+] Maddaloni/Roll Call/Getty Images) CQ-Roll Call, Inc via Getty Images Yes, that would be the same Senate that has voted to inject hundreds of billions of distortionary borrowed dollars into the economy over the past three years.

The contradictions involved in a federal government pretending private market power rather than its own economic predation is problematic are increasingly apparent but ignored as usual, including in the news coverage. The timing for Kroger-Albertsons could have been better. Sailing on the currents of Biden’s whole-of-government “ Promoting Competition in the American Economy ” executive order that seeks to strengthen federal power over and displace private economic priorities, the antitrust bureaucracies will drag likely things out and impose conditions and constraints.

( See the musings of Biden’s White House Competition Council) For progressives to self-reflect and to question antitrust regulatory intervention now would impede their preference for federal centralization and consolidation over the economy. The still-undisciplined political abuse of the Covid episode has only emboldened them. The merging parties naturally invoke competition from the likes of WalMart and Amazon AMZN —which already outweigh them in heft—as justification for their combination.

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Supermarket supply chains represent highly significant and sane infrastructure, in contrast to the likes of Biden’s subsidized white-elephant charging networks for highly polluting and also subsidized electric vehicles. All infrastructure initiatives—from tap water to asteroid mining—should should ebb and flow with maximum flexibility, so a “mere” grocery merger should proceed as rapidly as possible. This merger, like others, will in turn induce further competitive reactions down the road, and consumers benefit from that process.

But of course we know the flexibility of unimpeded competitive free enterprise is intolerable in a Washington that prefers make-work and control. Given the inevitability of Washington butting in, policymakers with more level heads need some context before yielding to the federal government and its Federal Trade Commission and/or Department of Justice raising objections. The major problem with federal government intervention into this merger would be the hypocrisy involved.

Joe Biden is again this week on stage touting the cyclopean “Infrastructure,” “Innovation” and “Inflation” legislative enactments he likes to take full credit for. These Acts entail extraordinary government intervention and displacement of free competitive enterprise with avowed “mobilizaton of government ” and corporate welfare handouts — all while attacking “unacceptable” corporate profits and blaming everyone except Washington for shortages, mangled supply chains and inflation. Supermarket supply chains are a highly important form of infrastructure that need TLC in these times of largely artificially induced but still-unpunished instability.

The Kroger-Albertsons merger would be a normal, sane and sober version of expanding infrastructure health and wealth in its corner of a vast $20 trillion economy, in contrast to the central government’s spending on manipulative and distortionary top-down infrastructure and climate conceits now underway. “A lot of it has to do with a real intentionality that we have to re-shift industries ,” Kamala Harris just told an interviewier in response to a question about what “climate actions,” so-called, the administration has taken. Whatever that nonsense means, the totalitarian sentiments behind it represent the mindset of U.

S. progressive leadership that disrespects free enterprise. The threats looming behind the federal government’s own boasts of being both the largest purchaser on Earth as well as the largest employer in the United States must not be ignored.

Washington, today, is using its very bloat as a weapon to push the economy around as well as inflict progressive conceits like the climate religion and ESG policies. Given that hyper-debt-fueled spending plus massive contracting, procurement and hiring heft have now been backed up by aggressive new legislation aimed specifically at federal consolidation, the only monopoly and monosony power to worry about is that of the federal government itself. Washington can now be expected to throw its weight around building the useless C&O canals and contaminated lead pipes of our collective future rather than restraining itself and freeing up the private sector with the radical deregulation now necessary before it is too late.

The deliberations of the aforementioned “Competition Council ” capture the arrogance on display, but see also a joint press conference between Joe Biden and Merrick Garland that took place on January 3, 2022, throwing punches at industries across the economy in service of Biden’s subversive ” competition policy” executive order . See also the casual calls for anti-market collusion between business and government by Biden and Kamala Harris at the Summit of the Americas . Policymakers not drunk on power must shield private ventures from antitrust predation, and instead address the federal consolidations underway that represent the real risks to the American economy and competition.

As for the far lesser heft of a merely private and stock-market-disciplined Albertson’s and Kroger KR combine, the benign nature of merger shouldn’t have to be repeated again, but here we go with some of the more obvious, traditional, objections to antitrust regulatory intervention. There is far more to “competition” as a process than simply a headcount of the number of competitors in an industry, or industry concentration. A small number of firms can still mean healthy competition, especially in comparison to Biden’s fusion of business and government across the economy.

When firms like these grocery giants merge, sure, the number of competitors in that line of business declines at least temporarily. But firms that join forces to create a large market share may also generate cost efficiencies that outweigh declines in output. Their actions do not occur in a vacuum; they also inspire competitive responses.

Antitrust’s cardinal sin is that it suppresses the otherwise necessary competitive response to a supposed “harmful” action, thereby directly harming consumers. That is a primary reason to abolish antitrust. Bad business ventures can be quickly unwound.

That’s not going to be the case with the rotten fruits of Infrastructure, Innovation, and Inflation mega-legislation from which there is no protection no competition to them by design. Furthermore, a given business combination can be necessary to establish a still-higher-level platform from which to launch new output or fresh lines of business—and again, competitive response. The only way to know is to try and see.

Antitrust pretends to protect consumers, but it’s mangling of market processes harms them. Ponder tht, maybe if we had grocery combines that were twice the size of Kroger-Albertsons, we wouldn’t find ourselves running out of toilet paper, tampos and baby formula. Current wonky merger guidelines do claim to take “dynamic efficiency” effects into account, particularly when those effects cannot be achieved except by merging.

But particularly in todays environment, that is a lukewarm and overly “mother-may-I” posture inflicted on the private sector unnecessarily, binding it while federal projects, spending and regulation steamroll ahead. The great infrastructures we need—in contrast to the premises of Biden, antitrust orthodoxy, and the mega-legislation fusing business and government enacted over the past three years—will require vastly larger private firms than what exist now; vastly larger (consider the resources and wealth-creation required for space commercialization). Current public policy seeks to institute vastly larger government instead, with most major ventures now entailing contaminated and anti-competitive business/government hybrids, not free enterprise.

In spite of all this, hypocritical challenges to and conditions on ordinary mergers remain widespread. Aggressive policing and micromanagement of mergers—not just the prominent interventions notable with respect to “big tech” but in the basics like groceries—are particularly troublesome, since modern, wealthy society is characterized by ease of entry greatly exceeding that of the smokestack era that spawned antitrust in the first place. If the promised cost savings from a Kroger merger do not materialize, that too is a key and necessary market reality revealed in real time to which there will be competitive, pro-consumer responses by other firms.

To disrupt the process will deprive unserved localities of stores and services that the merger’s (potential) profitability might make feasible. Even if a merger doesn’t make society better off, one must ask the more fundamental question: whose output is restricted by a merger? In a market economy, producers are free to associate and are not forced to part with their wares on unfavorable terms, as CEI founder Fred Smith points out. Those fundamental property rights —a foundational notion at odds with old-school antitrust philosophy as well as the new Biden/progressive “whole-of-government” interventions—do not conflict with social welfare but are essential to it.

Consumer benefits require the dynamism that both rivalry on the one hand and strategic combinations on the other can deliver. Policymakeres are unlikely to get into such philosophical weeds as debate over the Kroger-Albertsons merger proceeds. That should change, though.

Trustbusters, so called, like to narrowly define markets in self-serving ways to highlight alleged negative consequences of a merger. They are likely to cook up something new and arbitrary involving groceries the way they have in the past with respect to “carbonated soft drinks” vs. mere “soft drinks;” or for “intense mints,” or “jarred pickles.

” It would be nice to find ourselves comfortably beyond these lunacies, but that may need to await disbarments that will need to accompany the dismantling of the utoptian progressive/administrative state. It’s been repeated far too often, but always be suspicious of objections coming from direct competitors of merging firms. Those are a tip-off to a merger’s efficiency rather than to any purported anti-competitive effects.

A merger expected by competitors to generate higher consumer prices—which is what a monopoly allegedly does, after all—would benefit those competitors. They could sell more at existing or even perhaps higher prices while still undercutting the new monopoly. To be sure, not all mergers make sense, and plenty of them don’t work out and probably shouldn’t have been attempted.

But market experimentation and trial and error in business arrangements and combinations are vital processes for which there are no replacements. Bloopers are fixable, unlike the havoc coming our way in the wake of the past three years’ legislative mergers between business and government, like the CHIPS and Science Act corporate welfare program Biden was hyping again this week . While government ought not inhibit private, voluntary mergers, it should not be promoting these artificial, involuntary taxpayer-funded entanglements either.

If there were actually a real “White House Competition Council,” it would know that. Progressives like to pick winners rather than improve the racetrack for everybody and then get out of the way. Of mergers that do go through, antitrust authorities are increasingly extracting concessions from merging companies, targeting particular high-visibility combinations and prying into the firms’ operations well beyond consumation of the merger in support of their revolving-door careers in “public service.

” Time will tell on this new proposed venture, but wringing out onerous consent decrees places burdens on market processes, injecting a far-more-hefty by comparison central government into an industry as a potentially permanent unwanted “partner. ” These threats are what induce the prophylactic divestitures that combines like Albertons/Kroger feel impelled to make. In this environment, even as government interventions and manipulations of private markets expand, genuinely private, healthy and competitive potential mergers may be chilled and never even attempted.

And unnecessary concessions may generate less efficiencies in the hobbled consolidations that do materialize. To play the antitrust game is to lose it. The market, shareholders and consumers should decide the appropriateness of mergers, not Washington.

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