Verizon has recently been on both ends of the contemptible U.S. antitrust law. The company has been the victim of antitrust laws and is now attempting to use them against competitors.
Despite the fierce competition between the four dominate wireless providers (Verizon, AT&T, Sprint Nextel & T-mobile) as well as numerous smaller firms, the government has seen it necessary to involve itself. Verizon recently completed a merger with Alltel. One of the conditions of this merger was that Verizon divest itself of many of Alltel’s assets and customers.
According to a Wall Street Journal report, Verizon was forced to sell off 2.1 million wireless subscribers in 22 states, as well as radio spectrum and other assets necessary to run the businesses in those markets.[1]
In essence, the government mad it impossible for some consumers to choose to purchase Verizon Wireless’s service even if they feel it is in their best interest. So it seems that the government is restricting consumers’ choice under the pretense of increasing competition and protecting consumers. Anyone even casually familiar with Austrian theory already understands the absurdity of antitrust laws. The outlandishness of this particular case should be apparent even to non-Austrians.
One hopes that companies that are the victims of antitrust laws will be more likely to lobby against them in the future. Apparently Verizon didn’t learn a lesson from its Alltel deal. Rather than opposing antitrust laws, Verizon is now trying to use these laws for its own gain.
Verizon has entered the cable television market and is now attempting to use the government to advance its interests. Cablevision is the owner of a channel known as MSG which has the rights to broadcast Knicks and Rangers games. Verizon filed a complaint with the FCC because Cablevision wouldn’t allow Verizon to carry its MSG channel. Cablevision tried to appease Verizon by granting access to MSG and MSG Plus. Verizon is now complaining to the FCC because Cablevision will not grant access to MSG in high definition.[2]
Verizon is trying to use the government to violate Cablevision’s property rights. MSG is the property of Cablevision and provides the company with a competitive advantage just as Craftsman is the property of Sears and provides it with a competitive advantage. Is Sears’ refusal to sell Craftsman products in Walmart anti-competitive and harmful to the consumer? Certainly not.
As has always been the case with antitrust laws, companies are all too willing to support and use them when it is to their advantage and to the disadvantage of their competitors. Unfortunately, it is the consumer who generally looses.
{ 6 comments }
I agree with the author’s comments, except for this line: “The outlandishness of this particular case should be apparent even to non-Austrians.”
This case is not outlandish. Quite the contrary, it’s a boilerplate “divestiture” case. Every DOJ/FTC merger case involves similar provisions. Indeed, the government doesn’t just forcibly assign customers; it also assigns employees, assets, and even brand names. This happens in every case. It only seems “outlandish” because most people don’t take the time to actually study the terms of these “divestitures.”
Let us not forget that Verizon and all the other former Ma- Bell companies were allowed to bypass the franchising process that all other Cable companies must follow. They were granted permission by the government to get statewide franchises, whereas the cable companies needed to get township franchise agreements, thus reducing the price of entry into the market and allowing them “cherry pick” the more affluent areas.
You are wrong about the Verizon / MSG / Cablevision issue. MSG is a sports network that carries local sporting events in the NY area, including NY Rangers and NY Knicks (owned by cablevision), and other teams such as the Islanders, Devils, and Nets.
These teams have all received tax breaks, public money for their various stadiums and arenas. They do not operate as free market entities, and therefore have no general right to restrict viewing of teams that are state-subsidized.
If Cablevision never took government money for their business, I would agree that they should not be forced to provide their games to other carriers. This is manifestly not the case here. Viewed in light of all the public money they have received, forcing them to allowi other carriers access to the games in question hardly strikes me as a major issue.
Pax-First, a tax break is not a subsidy. Second, the issue is not whether Cablevision has exclusive rights to the team, but exclusive rights to the channel. MSG is owned by Cablevision, who may show whatever it chooses on that channel. Verizon is disputing Cablevision’s right to restrict access to the channel, not the teams.
Author writes: “One hopes that companies that are the victims of antitrust laws will be more likely to lobby against them in the future. Apparently Verizon didn’t learn a lesson from its Alltel deal. Rather than opposing antitrust laws, Verizon is now trying to use these laws for its own gain.”
That hope seems irrational to me. If other companies successfully used anti-trust laws against my company, it would clearly be in my best interest to use them against those companies. When government sells itself out as a weapon to be weilded by corporations, you have no choice but to use that weapon or lose.
I agree with the author’s comments, except for this line: “The outlandishness of this particular case should be apparent even to non-Austrians.”
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