What is anti-trust?

First of all, what is anti-trust? Anti-trust is the way the government makes sure that businesses don't become monopolies. A monopoly is when one business has total control over an important aspect of human life. Say, for example, that a computer company develops a tool to run programs that's quicker and more powerful than anything else around. Everybody wants one, everybody buys one. Soon, if your computer doesn't have this specific tool you're hopelessly out of date. It's not just a luxury anymore, it's a must. Well, once that certain tool becomes a must the computer company that developed it can pretty much rule the world. After all, computers run the world, and no computer can go without that tool and not be hopelessly behind and pathetic.
Now, generally the company that owns the tool wouldn't immediately start hatching evil schemes involving missiles hidden in underground silos etc. But they could, and probably would, begin to act somewhat unfairly. They might raise the price of the tool to a ridiculous amount. They might say: "Look, we'll only sell you our tool if you buy our computers, too." The could began to develop other things such as coffee machines and alarm-clock radios, and, you guessed it-make the purchase of an alarm-clock and a coffee machine mandatory for everyone who wants the tool. You get the picture.

Anti-trust is also concerned that other companies keep being able to compete with this monopoly. If it starts making alarm-clocks, other alarm-clock companies will go out of business, and so forth. And other computer companies, of course, will surely go out of business.
Anti-trust rules are there to keep this sort of thing from happening. Anti-trust rules, in fact, want to stop it before it even comes close to happening. Now, it might seem unfair of anti-trust rules themselves to do this. You might be thinking, wait: that computer company developed that tool on its own initiative, it worked hard to build it, advertise it, keep it constantly updated, make it more and more convenient, and so forth. It isn't as if the company's sitting on its hands, it isn't as if the company's not working. And furthermore it was their idea. Why should anti-trust punish them for success? Who is anti-trust to decide when a company has gotten too powerful or not? Why should the government care whether or not there is lots of competition when it comes to computers or anything else? They don't step in when the Yankees win seventy-five World Series in a row. Why shouldn't that successful computer company (which is, after all, run by free men and women in a democracy) do what it wants and enjoy the fruits of its success?
Now, that's a very ideal way of looking at it, and it's certainly a valid one. Many people make it all the time. All sorts of debates are raging about anti-trust, asking whether anti-trust itself is too powerful; whether it, in a sense, has ironically become what it was created to prevent.
The fact remains, however, that for any economy to remain vital there must be competition. For any country to remain strong there must be competition amongst its business leaders, inventors, scientists, doctors, and so forth. Why? Because when Jack knows that Jill has just developed a rocket that flies farther and faster than his own, he'll go straight to work trying to come up with an even better rocket. And governments need rockets. Governments need their economies to be strong, and you need your government's economy to be strong, which is, after all, your economy too.
Anti-trust, then, not only prevents companies from becoming to powerful and thus be able to take advantage of the rich and poor alike; anti-trust also tries to ensure a healthy, bustling, vital economy. The debate about the details of anti-trust law will rage on, but time has shown that anti-trust as a principle at least is not wrongheaded.

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Categories: Business Strategy,

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