Monopoly is Not Just a Game: Governments Take Serious Action with Antitrust Legislation

Everyone envies the player who buys both Boardwalk and Park Place, owns every railroad company, and purchases hoards of obnoxious plastic houses because, inevitably, all will land on that double-hotel property and pay a pretty penny to a very smug, unremorseful owner. Clearly, Monopoly is a cutthroat game and it only yields one winner—it is definitely no "candyland". In fact, the board game, an American favorite, provides an accurate reflection of the kind of business monopolies that ruin competitive markets. Luckily, in real life such unfair actions don’t go unnoticed and governments interfere with money-hungry corporations in order to protect the economy. Dating back to the dissolution of the Standard Oil Company trust in the early 1900’s in the United States, antitrust laws such as the Sherman Act of 1890 have helped eliminate the threat of cartels and monopolies worldwide and are still used today.

In the past week international organizations made two influential antitrust decisions that will have major implications for the global economy. The first is the completion of the final draft of antitrust law in China and the latter is the European Union court’s ruling against the software corporation Microsoft. In the advent of these events I decided to explore the blogoshpere to discover what other scholars and professionals have to say about the matter. The first blog I found, Center for International Finance and Development, is the University of Iowa’s College of Law blog that covers current events in global finance. The post I analyzed, “China Passes Anti-Monopoly Law”, comments on the new Chinese laws and speculates about their future impact on international business and investment. The other blog I discovered, The Crucible and Column, focuses on modern industrialism issues. In the article “EU to Microsoft: You’re Too Good”, author and market manager Kendall Justiniano criticizes the EU’s recent legal decision. After reading these articles I commented on each, offering my own analysis of the situation and posing scholarly questions. Below this introduction, my comments and the links to these blogs can be found.

Comment:

While I commend China for taking action against monopolies and supporting a competitive market, your article encouraged me to also explore the negative impact that China’s new antitrust laws will have on international trade and investing. You stated that “some foreign investors worry the government may use the new law as a basis for protectionism,” and I find myself fearing this same result. China’s history of isolationism does not help to abate these fears either—their disregard for foreign interaction started with the closure of its borders in the 1500s under the Qing Dynasty and continued into the 20th century during Mao Zedong’s communist regime. Perhaps the examples of isolationism I just described are not exactly protectionist policies, but their underlying premise is the same: China does not seem to favor or welcome foreign involvement. Furthermore, these new antitrust laws which are comprised of “vague” legislation may allow the Chinese government to arbitrarily prohibit “unpopular foreign investment” and this could be detrimental to many international businesses. On a different note, you also report that the new policies “will eventually do away with government monopolies”. However in Article 7, the law provides that certain state-owned industries will be “protected by the state”. If this law stands, how do you foresee the abolishment of these government monopolies and what timeline do you predict for this event?

Comment:

After reading your article and researching antitrust laws over the past week, I too have concluded that the allegations and final ruling against Microsoft are unreasonable and have major implications for the business world. Although I fully support antitrust legislation when it effectively curbs monopolies, I see it as an impediment to market growth when it is excessively applied. If Microsoft was successfully sued for providing (or “bundling” in the words of the opponents) their customers with a media player option in their operating system, then corporations worldwide need to take note. Apparently the promotion of one’s product over that of the competition’s is now grounds for suing. Apple iTunes will have to be compatible with all MP3 players, Gillette razors will have to hold every brand of blades, and the list goes on. Instead of promoting fair market conditions, these kinds of rulings will only prohibit capitalism. In your article you suggest that the only solution to this problem is “laissez faire” economics because “monopolies which hurt the consumer cannot exist for long in a free economy where proper rights are enforced.” Although I agree that laissez faire is a logical answer, I’m curious how you propose countries to successfully enforce these “proper rights” in the absence of anti-trust legislation. Is there a more effective solution on the horizon?