Friday, September 12, 2003

Antitrust News: Breaking the Glass Monopoly

The Justice Department's Antitrust Division is cracking down on price-fixing in the glass market. Well, part of the glass market anyway:
Three Fort Worth companies, who own and operate retail automotive replacement glass stores, today were charged with participating in conspiracies to raise and maintain the prices of automotive replacement glass in the central North Texas and Lubbock areas of Texas, the Department of Justice announced.

Windshield Sales and Service Inc., Windshield Sales & Service of Dallas Inc., and Mesquite Auto Glass Inc. were charged in U.S. District Court in Lubbock, with conspiring with others in central North Texas from February 1998 until May 1998 to raise and maintain prices for the purchase of automotive replacement glass. Additionally, Windshield Sales & Service Inc. was charged with conspiring with competitors to raise and maintain the prices of automotive replacement glass in the Lubbock area from March 1998 until May 1998.

Automotive replacement glass is sold to retail customers for the replacement of windshields, side glass, back glass, and other types of automotive glass in pick-up trucks, passenger vehicles, and other vehicles.

"Today's charges reflect the Division's commitment to prosecute those who seek to deny the benefit of competition to American consumers," said James M. Griffin, Deputy Assistant Attorney General in charge of the Antitrust Division's Criminal Enforcement Program.
Griffin's statement needs emphasis. The Government has brought criminal charges against these companies on the grounds that they "deny the benefit of competition to American consumers." There is no law mandating corporations provide this benefit. The Sherman Act only prohibits restraints of trade, and by any objective standard, a restraint requires an act of force; here the only allegation is that the defendants voluntarily agreed to charge the same prices. Aside from the obligations of contract, no competitor could force another to take any action against their economic self-interest.

But even if you believe price-fixing is wrong or unethical, ask yourself whether it should be a criminal action. In this case, only corporations stand to be convicted, incurring a maximum fine of $10 million. But individuals have been convicted of criminal price-fixing in this market, and they received jail time. Can we really justify denying a man his freedom over how he chooses to price his own products for sale to consumers? Should the government invoke criminal law simply because it disagrees with the prices in a particular market?

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