A couple of additional issues to confuse the issue further, speaking as an
economist (since I'm not a lawyer). First, the line between price fixing
and market leadership is very fine, and is often pretty tricky. Going to
the gas station example, if Jack and I own the gas stations in town, it is
clearly a violation if I call him and say "You know, Jack, I've got a boat
payment due, and it would really help me if we both raised our price from
the current 99.9 cents per gallon to a more profitable $1.599; what do you
say?" I've just violated the law, and unless Jack hangs up immediatly
(and, depending on the judge, maybe even if he does hang up) he has, too.
BUT if I raise my prices one night and the next morning Jack sees that on
his way to his station and raises his prices to the same level as soon as
he gets there, that's price leadership and perfectly legal (think of
airline price increases/decreases).
The second issue is the definition of "market". The example I used to use
in class was the softdrink market; we have seen in the USA legal arguments
regarding cigarettes lately, too. Does Coca-cola have a monopoly, or
monopoly powers, in its market? What IS the market? Is there competition
for coca-cola? If the market IS coca-cola, then clearly the coca-cola
company has a monopoly. If the market is cola based drinks, than coca-cola
probably has monopoly powers (depending on what definition of "monopoly"
powers the Department of Justice - DOJ is currently using - it fluctuates
:0) If the market is soft drinks the amount of power coca-cola has is
reduced again; if the market is drinks, or even liquids, the monopoly power
is reduced further still. The DOJ has to PROVE market dominance in court,
which is usually difficult. Internal memos indicating that the company
thinks it has monopoly powers are VERY bad news for the company, however;
makes one wonder about the allegations of disappearing emails from M$.
The question in the M$ case will come down to whether or not, in the eyes
of the courts of the good ol' USofA, M$ has (oops...another issue...the DOJ
has fluctuated over time regarding whether it is illegal to USE monopoly
powers -they have always said that- or illegal just to HAVE monopoly powers
-they sometimes say that) monopooly powers. If they have monopoly powers,
they are probably in trouble; if they have abused those powers (as alleged
by virtually every other software company in the country, if not the world)
the DOJ will be required to do "something".
Exciting times!!
My $.02 worth...
Doug
At 03:42 PM 9/16/98 -0700, you wrote:
>Very true brett.
>
>The most recent example that I can think of that violated this
>position were the gas stations. They would get together and figure
>out how much they would charge...this was few years ago, when I was
>but a wee little tadpole and computers were mostly big buildings<G>..
>
>But if the allegations against MS stand true in this area, then they
>have conspired to form a monoply. Of course, with MS denying they
>ever did this, and other companies stating that they did..with no
>collobrating evidence, it may be difficult for the government.
>
>As to OS monoply, fortunately Linux has risen to the top of the
>cream. MS may soon have to accept Linux as a viable choice to their
>operating system and start supporting it, or be lost in the dust.
>
>
>> Jack Killpatrick wrote:
>>
>> > Can anyone explain to me what "market allocation", as referred to above,
>> > means?
>>
>> Communism. :0
>>
>> Basically, they each take a part of the market, and agree not to compete
>> with each other in those markets. Each company gets all the income from
>> its area, and can nicely balance budgets and manage costs without fear of
>> competition.
>>
>> On the other hand, there's no competition, prices tend to get inflated,
>> and you also end up with companies protecting each other (say, by dropping
>> the price of products to limit competition entry into a market, with other
>> 'colluders' marking up services to the new company on other fronts to make
>> sure their costs go up while they're trying to drop product prices to
>> compete).
>>
>> Also makes it easy for a company to maintain larger markets against
>> competitors. When you have a guaranteed lock on a national market, for
>> instance, it's really hard for a new person to start in any region of that
>> nation . . . if you *know* you get all the income that year from that
>> market, you just raise prices somewhere else and lower them where
>> competition occurs, and no one can compete with you.
>>
>> Or, in the simplest terms, coordinated monopolies.
>>
>> Still standing by my advice to MS: break the company up now and save
>> yourselves a billion in litigation. :)
>>
>> Brett
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>--Lee
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