The Sisyphean task of antitrust enforcement
I was somewhat recently forwarded an article from Bloomberg Businessweek by a friend of mine following a conversation (over beers) about the resurgence of Pabst Blue Ribbon, seemingly because of its newfound hipster cachet. Although she hadn’t intended to make an issue of the government’s enforcement of antitrust, I found that in reading the article, the general impossibility of a coherent program of antitrust enforcement was highlighted. Why is antitrust enforcement such a Sisyphean task? Quite simply, because free markets survive and thrive on change. Changing tastes, time preferences, manufacturing methods, technologies, scientific knowledge, trends, fads, and prices.
Any good student of history knows that for every corporation like, say, General Electric, there are hundreds that are more like Great Western Sugar, International Harvester, and Willys Overland (and Kaiser Frazer and American Motors). I highlight these companies on purpose – they were all among the largest and quickest corporate collapses of all time, going from their era’s equivalent of the Fortune 500 list to bankruptcy or forced merger within a few short years. So how is it that, when market forces can annihilate a company in the blink of an eye, we need government bureaucrats to tell us when a company, which sells us the products that we either want or don’t want, has too much “power” over us? Nobody’s forcing me to buy a beer…
And so it is with Pabst Blue Ribbon. The beer that is seeing a huge resurgence is still a shadow of its former self, and the entrepreneurs who invested in its name now also own 5 of the 10 of the top selling beers of the 1970s. All of which were basically defunct just a few years ago:
With the acquisition, Metropoulos has taken control of a murderer’s row of brand names — if it were 1973. Of the 10 best-selling U.S. beers that year, Metropoulos now owns the brand names for the second, third, sixth, seventh, and eighth slots: Schlitz, Pabst Blue Ribbon, Schaefer, Stroh’s, and Falstaff, respectively. None is in the top 10 now.
“Falstaff” was in the top 10 beers of 1973? Maybe I’m showing my age here, but I don’t remember Falstaff at all. (Outside of Verdi’s classic opera buffa, of course.) It’s a good thing the antitrust enforcers didn’t get involved in that one.
Although that example is clearly lost on the antitrust bureaucrats. Remember some five years ago when Blockbuster tried to merge with Hollywood Video, and the FTC blocked the action, saying it would give the resulting company “too much market power”? In case you haven’t been keeping up with the news, Blockbuster is bankrupt.
Markets already thrive on change, but the antitrust crusaders keep rolling that stone up the hill.