Antitrust: Reads Like a Fairytale!

Pivotfarm's picture

Once upon a time in the good old U.S. of A, way back in the 19th century, there were gigantic companies that were known as trusts. We had trusts for Steel, we had trusts for oil, we had trusts for railroads, and we had trusts for just about everything except trust itself.

Trouble with trusts is that the ugly ogre that lives under the bridge is married to the step-mother of the three ugly sisters and it ain’t Cinderella going to the ball. Trusts create monopolies, monopolies bring about supply control and supply control leads to price fixing. If there is nobody else around (and no knights in shining armor), then, the princess is hardly likely to be saved from the clutches of the beastly wart-ridden witch.

Antitrust was the poison apple that nobody would want to eat and that governments had to get rid of. The US Congress ended up passing laws to protect consumers from the bad practices of antitrust methods in the hope of boosting competition.

1. The Sherman Act 1890

Competitors are legally restricted from making agreements to limit competition and free-market economics. It is this act that makes it illegal to be a monopoly.

2. The Clayton Act 1914

Although it was illegal under the previous act to control prices, there was a way round this legislation, but merging and creating means to control prices of products on the market. This act forbids mergers and acquisitions taking place if the company that will be created is going to limit competition substantially.

3. The Federal Trade Commission Act 1914

The Federal Trade Commission was set up to carry out surveillance of the market and make sure that unfair practices were not being implemented.

But that doesn’t mean it’s all a happy ending and they get married, have two kids and live happily ever after. There are still cases of antitrust violation. There are breaches. There is collusion and there are agreements between companies to fix prices every day around the world.

  • UK booksellers agreed in 1900 (until 1991) to sell books at the recommended retail price under the Net Book Agreement. This all went wrong in 1991 when two large chain stores (Dillons and Waterstones) discounted their books. Prices collapsed and there was an end to fixed pricing techniques.
  • In violation of the Sherman Act, the Fashion Originators’ Guild of America refused the sale of their clothes in stores that had replicas of their garments.
  • American Tobacco Co. was prosecuted in 1946 when it was divided up into four ‘separate’ entities. However, those entities still had control of the entire market in the US. This was forbidden under the Sherman Act.

Certain fields are not concerned by the antitrust violation laws of the world and these include the sports sector, media, utilities, health care, insurance and banking or financial markets. Ah! Let’s make laws, and then exempt those that may be the worst perpetrators of them just so they don’t get prosecuted?

In the EU, if companies cooperate with antitrust commissions then they see their possible fines either reduced substantially or wiped out. That’s not a bad ending to the fairytale is it? They all lived happily ever after…after all?

Originally posted

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The Heart's picture

This Story: short, sweet, simple, educational, and very much appreciated.

Now, if only the out of control corruption and criminality that is responsible for the planned collapse and crash was somehow corrected by using these acts of law. Were this to happen, could it be possible to change the dreadly course this ship is on?

Or conversely, since these acts are not adhered to and basically mean nothing, then this must indicate that the new Bolshevik-draconian type acts are just as phoney baloney and worthless too? That is saying the NdAa and patriot act etc blah, blah , blah, are just as bogus as the Sherman and other acts too?

Isn't it true that ANY law passed that is contrary to the US Constitution is illegal, null, and void?

FreedomCostsaBuck-o-Five's picture

Borinnnnngg. Isn't this the same Pivotfarm that just posted this weekend about how the outlook is "rosier" for the economy etc? He must have come off his bong-induced high to go fear mongering in this article. I'm also wondering, is Pivotfarm Tyler's new favorite bitch? Why does he get banner billing on two articles at once?

SKY85hawk's picture

Trust structures are still widely used, by the US Gummint  This is Common Law which goes back a thousand years or more.

Notice there is a Secretary of (Treasury, Commerce, State, Navy, Air Force, Marines, Army & many others). Secretary here is not a typist that sits on the boss's lap, it is the Boss!.

If TRUSTs are bad why is the EXECUTIVE the only Corporation (has a President)?

Think about Bob Dylan's words:  Twenty years of schoolin and they put you on the dayshift.

Watch out kids, they keep it all hid.


steveo77's picture

UPDATE Matt from BPT sent me a link to the full version of the Newsletter with the Audio Overlay, so this is the complete product, for free, enjoy.  
48 Professional Charts. Did I mention FREE? newsletter.html

CustomersMan's picture


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CustomersMan's picture

Global Consumers Take it Up The Ass Again for Big Business and Oil Co's

Note: Another from the list of 18 most surpressed technologies

"The father of our country, George Washington, who is rumored to have said "I cannot tell a lie," was a proud supporter of the hemp seed. Of course, the only thing more suppressed in this country than an honest politician is hemp, which is often mistakenly for marijuana and therefore unfairly maligned.

Governmental roadblocks, meanwhile, prevent hemp from becoming the leader in extracting ethanol, allowing environmentally damaging sources like corn to take over the ethanol industry. Despite the fact that it requires fewer chemicals, less water and less processing to do the same job, hemp has never caught on. Experts also lay the blame at the feet of (who else?) Presidential candidates, who kiss up to Iowa corn growers for votes."

There have always been tons of rumors that Standard Oil feared "hemp" more than any competition because of its many properties that compete MORE than favorably with Oil and petro-chemicals.

moneybots's picture

"Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems; some of these same voices also doing their best to gum up the works. They’ll warn that tyranny is always lurking just around the corner. You should reject these voices. Because what they suggest is that our brave and creative and unique experiment in self-rule is somehow just a sham with which we can’t be trusted."

Barack H. Obama


Self-rule is just that.  Obama does not beleve in self-rule.  Obama believes in there aught to be a law or regulation to rule over the self.  Click it or ticket is not self-rule.  The ACA is not self-rule.  Government intervention in the medical free marketplace has been creating problems for a long time.  Now it is creating new problems.  People are losing a full time job and are forced into part time jobs, for one.  The IRS is now involved in medical care.

Government guaranteed student loans are creating problems.  Students are winding up with an average of 26,000 in debt as a result of a program that is supposed to make college more affordable.  Now there is talk of FED rate loans.  If i was running a college i would be jacking up the cost of tuition to take full advantage of those FED rate loans and drive the average student debt well above 26,000, to whatever the market would bear at a lower rate.   This will leave students with more debt, not a cheaper education.  By accepting government guaranteed loans, students have become debt slaves, which has not solved their problem. 

Gum up the works- what the works?  Government control.  Government control is not self-rule.  Government control is tyranny. 

Tyranny is not just lurking around the corner.  Every new law or regulation reduces self-rule.  Tyranny is already here and now.


Stuck on Zero's picture

Bankers and Politicians:  Their greed is for your good.


scraping_by's picture

And who's the senior partner? There's always a senior partner.

Beyond the psychological drives, you've got social goods and socially recognized ideals. They can be and are created out of air and broadcast until they're everywhere, but they're still the social ideals.  Indeed, an economics degree at any university can be seen as no more than one long propaganda ride.

Same suits, very different roles.

Everyman's picture

Why do we have laws?  To stop Criminals.

That paradigm does not work when the criminals are not "punished" properly.  All those acts are worthless, and only catch the "little fish". Laws mean nothing anymore.

TheReplacement's picture

"Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems; some of these same voices also doing their best to gum up the works. They’ll warn that tyranny is always lurking just around the corner. You should reject these voices. Because what they suggest is that our brave and creative and unique experiment in self-rule is somehow just a sham with which we can’t be trusted."

Barack H. Obama

d edwards's picture

The words of a tyrannt at heart.




Freedom is slavery.

scraping_by's picture

Look beyond the government to the paymasters of the government officials.

If government is their tool, it can be our tool.

Hobbleknee's picture

Show me an anti-trust case that benefited the consumer.

williambanzai7's picture

Most recently the AU Optronics LCD screen price fixing case.

And this article is a flimsy digression, space filler is a fitting description, on the history of Antitrust Laws and their related enforcement.

Monopolistic behavior, price fixing and unfair and predatory business practices are extremely difficult for markets to self regulate. These were the business tactics so masterfully deployed by the original robber barons.

Unfortunately, the antitrust regulatory apparatus, like securities enforcement, has been defanged by bought politicians and converted to another feckless porn monitoring operation. The Libor price fixing situation is a case in point.

Similarly, the judges appointed by the same politicians have made it more difficult for small businesses to enforce private remedies. So they all have to cower in the shadows of modern business giants like Google in fear of being shut out for having the gall to antagonize the bully.

KingTut's picture

The AT&T breakup was a mixed bag, but ultimately an inevitable form of suicide.  AT&T's crown jewel was Bell Labs, which conintued the work on microwaves begun as part of radar research during WW-II.  By the 1960's the technology had become very capable and robust.

Of course, AT&T was not a typical monopoly because it was heavily regulated.  Specifically, it was allowed to operate as a monopoly if it would implement "Universal Service".  That is, every home in the USA would be eventually be wired for telephone whether it was profitable or not.  To pay for this, long distance calls were kept extrordinarily expensive, especially during the day.  Obviously, businesses were paying a lot of money for long distance calls which in turn subsidized Universal Service program.

Now Southern Pacific railroad used long distance telephone to manage its nation-wide operations at great expense.  Southern Pacific also had rights of way along all its tracks.  Enter microwave technology which used "line of sight" repeater towers to handle enormous volumes of telelphone traffic.  SP simply replaced AT&T's service with their own microwave system, saving HUGE amounts of money.  The capacity of this system was many multiples of what SP would ever need, so they began selling "bandwidth" to companies that also had large telephone bills, but no way to implement a microwave system.

That was the beginning of Sprint (the SP stands for Southern Pacific).  The writing was on the wall: AT&T's subsidized Universal Service business model was dead.  They would have to change or die.  They chose to die.

I remember growing up with the 10 pound bakelite  monstrosity that was the telephone.  This phone experienced NO INNOVATION for decades.  It was reliable, but an impediment to any kind of improvement in service.  Indeed, the culture of the regulated monoply was so moribund, they couldn't understand how to make products out of the technology invented at thier own Bell Labs.  They became a dinosaur waiting for the asteroid to make them extinct, which of course happened.

Shortly after the breakup all kinds of technology began flooding the marketplace from 100's of new companies dedicated to innovation, ultimately leading to the modern smart phone.  Admittedly, land line technology is still held back by the calcified standards left over from the Ma Bell era, but cell phones have revolutionized our lives.

Large organizations eventually cease to function for the benefit of anyone, and should be allowed to die off to make way for the new.  It's creative destruction writ large.  This is a lesson the banking industry will soon learn.

Kassandra's picture

I grew up during those times. I remember the bakelite monstrosities well. My Grandma, till the day she died, had one of those standard black circle dial ups. Then the 'princess' phones came along. Still, even with those, nothing was more satisfying than slamming one down on someone who pissed you off. You could throw it across the room if so inclined. Couldn't break the damn thing. Can't do that now. Now calls are way cheaper. But, for three of us, two on smart phones one on a clam shell, our ATT bill is over 180.00 a month. For 500 minutes of talk time. Tell me we have cost improvement. I supppose it is the same in 1960 dollars.

Rinky Dink's picture

The government did not break up the phone company.. AT&T saw that the computer and digital everything was the future and they wanted it. They wanted it bad. The problem was that they were limited to telephone communications and the DOJ backed by the courts refused to allow them to go into the computer business.

Imagine your phone rates if the monopoly phone company subsidized their computer losses by jacking your phone rates.

So AT&T offered to give up their monopoly in order to enter the computer business. In 1982 the DOJ entered into an agreement - a consent degree - with AT&T.

See Judge Harold Greene's writings if you are really interested in looking behind the AT&T curtain. What he had to say will instantly cure you "invisible hand" "free market" yo-yo's of your delusions. Decades of so called heavy handed government regulation barely dented AT&T's massive consumer fraud. Some stories even allude to corporate organized violence and assassination.

In the end AT&T dove headlong into the computer world - and lost their ass. Big Time. It turns out consumers and businesses do not take well to corporate dictatorship trying to pass off junk when there is a competitor or two or three or more that make stuff that actually works, costs less and looks better.

disabledvet's picture

AT&T invented Unix as I recall. Government was horrified because this software program had the ability to "mechanize" the bulk of professional classes in the USA. At&T is still there. IBM got crushed as well once the revolutionary nature of this "new idiom" was understood. The race has been on over Data ever since. This is about storage, transportation, securing, downloading, visualizing, manipulating, programming....and this is the docile view of "working with data." there are very agressive and malignant forms of dealing with the Data as well but this usually provokes a massive retaliatory response from the Government so I won't go there.

AmCockerSpaniel's picture

It was and always has been about money. Check what the CEO's now get! AT&T was restricted at that time on what and how much could be taken out of the company. Rates were set by the government. Local rates, were subsidized by long distance rates, and was the will of the people (government). At that time having a phone was a very big thing as it saved lives. If AT&T wanted to make more money it had to sell more and different stuff. Only then could the CEO's get their raises (this was NOT Wall Street). When AT&T lowered it's rates (with the blessing of the government) on long distance, call volume went up so much the company made more than ever. AT&T wanted to keep lowering it's rates after seeing this, but was stopped by the government. The point is, that what AT&T did or did not do, was never it's choice. Others now had control of the government, and AT&T. Their next move was "FREE TRADE". We let it happen.

AmCockerSpaniel's picture

If the AT&T breakup helped the consumer I just don't see it. The combined cost of all the telecom bills is larger than

the single bill from AT&T (profit was restricted by the government because AT&T was a monopole). The CEO's on down

had their pay questioned. No AT&T lobby was allowed. AT&T made all it's stuff right here in the USA. It was unthinkable

to do other wise. We like low prices, and don't give a dam about they neighbor having his job out sourced. We let it all

happen. Now we don't have skilled welders to build a bridge?? Or this is what we are told is the reason for having Chinese

worker brought in to do the wielding. We excepted it??  Every were I look, people say how they are victimizes. RE member

you neighbors job now?

illyia's picture

We don't care. We don't have to. We're the phone company. Lily Tomlin

As "Ernestine" the telephone operator [edit]
  • One ringy dingy... two ringy dingy.
  • Have I reached the party to whom I am speaking?
  • The phone company handles 84 billion calls a year, everything from kings, queens, and presidents to the scum of the earth.
  • How may I, in all humble servitude, be of assistance?
  • We're the phone company. We don't care; we don't have to.
  • What's that Mr. Veedle? Privileged information?... that's so cute.
  • You're dealing with the phone company, Mr. Veedle. We are not bound by city, state, or federal regulations. We are omnipotent.
  • You are not dealing with just anyone's fool. I am a high-school graduate.
  • Don't hang up. You've angered me, and when you anger me you anger the phone company and all the power necessary to tie up your lines for the next fifty years. Do I make myself clear?

The Search for Signs of Intelligent Life in the Universe

“Reality is the leading cause of stress amongst those in touch with it.”

eddiebe's picture

Hard to trust the anti-trust.

scraping_by's picture

Better to trust the monoplist. They must know what they're doing, why else would they get tens of millions of dollars a year?

Bindar Dundat's picture

The only thing better than a regulated monopoly is an unregulated one.  Hmmmm...who could that be?