Posted on 06/28/2007 1:28:18 PM PDT by Lurking Libertarian
WASHINGTON, June 28 — Striking down an antitrust rule nearly a century old, the Supreme Court ruled today that it is no longer automatically unlawful for manufacturers and distributors to agree on setting minimum retail prices.
The decision will give producers significantly more leeway, though not unlimited power, to dictate retail prices and to restrict the flexibility of discounters.
Five justices said the new rule could, in some instances, lead to more competition and better service. But four dissenting justices agreed with the submission of 37 states and consumer groups that the abandonment of the old rule would lead to significantly higher prices and less competition for consumer and other goods.
The court struck down the 96-year-old rule that resale price maintenance agreements were an automatic, or per se, violation of the Sherman Antitrust Act. In its place, the court instructed judges considering such agreements for possible antitrust violations to apply a case-by-case approach, known as a “rule of reason,” to assess their impact on competition.
The decision was the latest in a string of opinions this term to overturn Supreme Court precedents. It marked the latest in a line of Supreme Court victories for big businesses and antitrust defendants. And it was the latest of the court’s antitrust decisions in recent years to reject rules that had prohibited various marketing agreements between companies.
(Excerpt) Read more at nytimes.com ...
You are comparing apples and oranges. You would not compare a car today to that from 1910, would you? Just because they are both called "cars" they are not the same product.
Coursed on marketing always emphasize that cereals "Total" and soap "Dial" have almost nothing to do with their original versions.
Had there been a truly competitive product over the last 20 years, I have little doubt that the average price of an iteration of Windows would be considerably less.
You have reversed causality here: we have not seen a "truly competitive product" precisely because it was prohibitively costly.
You may or may not know of IBM 360 --- the first real operation system. Developed in 1960s, it has cost $1B (in THOSE dollars!) and did much less than Windows 98.
I'm betting if we have this conversation five years from now, I'd be able to better prove my point.
You'll never be able to prove your point for the same reason your opponents cannot: to argue it, you need internal data from Microsoft, which is unavailable to you even you make $500,000 as a Microsoft's wizard in software.
Isn’t it shocking how misinformed people are in economics? I always thought there should be an economics channel like the History, Military or Discovery Channels. Fascinating material.
A classic example is the Brazilian coffee cartel.
The high prices that the Brazilian cartel maintained were the very reason why their cartel was broken. Their competitors in Colombia, Jamaica, Mexico, Africa and Hawaii got into the business -- driving the price back down.
A lot of putative monopolies learned from the example.
I just want to hear you say it: "Airbuses be cheaper if Boeing went out of business".
You need to re-read whatever history it is that your are relying on. Standard Oil was the complete verticle monopoly and it damn sure didn’t keep prices down.
One reason my utility bills are so high.
If a monopoly is operating in a free market environment, it is to their benefit to keep prices low. Otherwise, they would attract competitors.
However, if a monopoly is operated in a government-regulated environment(e.g., utilities), it tends to keep prices high. Because, thanks to the government, they need not fear competitors.
“In sum, it is a flawed antitrust doctrine that serves the interests of lawyers — by creating legal distinctions that operate as traps for the unaware — more than the interests of consumers — by requiring manufacturers to choose second-best options to achieve sound business objectives,” the court said in an opinion by Justice Anthony M. Kennedy and signed by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr. I exoected Kennedy to start leaning more Conservative again with O'Connor gone, but I never expected him to go this far.
Type "Central Pacific Railroad" into Google or your search engine of choice. The Big Four who ran the railroad got senators to give them the land and pay for the construction, then made sure they had no regulation. They woudl demand that their freight customers open their books before negotiating a carrying price, so they could take all the profit. It was a disaster, but made four men millionaires hundreds of times over.
- - in the end, until the Santa Fe came along, it cost more to ship freight on a railroad from one end of California to the other than it cost to ship it by boat around the end of South America by ship.
That railroad is one of the reasons we have the Antitrust laws (and although its heyday predates him, its one of the reasons Teddy Roosevelt's "Trust Busting" policies were so popular.
“Monopolies typically drive prices down?” Were you sleeping during your college Economics 101 course? Monopolies drive prices up.
And by the way, this is not going to result in monopoly. It will result in Price Collusion.
Microsoft???
You have to be kidding me. Of course Microsoft has been charging higher prices for years because they have a de facto monopoly, both in Windows and in Microsoft Office.
If they had any significant competitor in the Windows area, the price for that software would plummet. And please do not tell me that Linux is competition because it simply is not.
So now web merchants with no service and support but that of the manufacturer, can’t undercut brick and mortar who do provide service and support.
Open source in fact can’t be competition for the aggressive DRM support in Windows.
And the rates are inevitably higher than they would've been in a competitive environment.
See Lubbock, Texas -- which, until the recent round of consolidation and de-regulation in Texas, had two power companies (they may still have, for all I know).
In Lubbock, you could see two sets of distribution lines running down each alley -- consumers had a choice of which one they would choose to connect to.
Lubbock had the lowest utility rates in the country.
They say a little knowledge is a “dangerous thing”. Sounds like you have a little knowledge about oil and railroads being monopolies in the US. However, you forgot the part about the Federal government taking anti-monopoly against both due to their price gouging brought about because each had a monopoly. Do the words Standard Oil mean anything to you? How about John D. Rockefeller?
My knowledge of market forces is limited, but from experience I remember how cheap telephones were when there was only Ma Bell, and how high the rates went when Bell was forced to divest.
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