Monday, July 10, 2006

The Antitrust Case Against Wal-Mart

Breaking the Chain by Barry C. Lynn is the title of an article published in this months Harper's Magazine. You can read it at the Saranac Lake Free Library. It's a difficult article to read because although it makes a case for antitrust action against Wal-Mart it also makes you realized that it's not going to happen in the near future. The reason? One word - politics. Ever since Saint Reagan was president the concept of antitrust lawsuits by the government has basically been thrown out the window. To Reagan, "only one action could be regarded as truly unacceptable - to gouge the consumer"(B.C. Lynn, Harpers, July 2006).

Well what about the Robinson-Patman Act of 1936, also known as the Anti-Price Discrimination Act or the "Anti-A&P Act? Wright Patman, the Texas Democrat who was the main force behind the bill, made sure everyone understood Congress's intent. "The express purpose of the Act is to protect the independent merchant" B.C. Lynn, Harpers, July 2006).

See the Great Atlantic & Pacific Tea Company was putting small family owned grocery stores out of business. They did this by undercutting them in their pricing. Back in the day, the US Federal Government was relentless against the A&P, hauling them repeatedly into court. The A&P was also a monopsony. This is when a company has the power to dictate pricing to its suppliers (remind you of anyone?).

There is another older article by Robert Reich entitled "Wal-Mart is too big: But not according to America's antitrust laws".
Is Wal-Mart too big? Not according to America's antitrust laws, which consider only one thing - whether a company is so big it drives competitors out, thereby forcing consumers to pay more. Wal-Mart is huge but it still represents only 8 percent of retail sales in America. That's not nearly enough to reduce competition.
Nope, you probably need to control 30% of the market before the government will take notice. But Reich tells us that antitrust laws had another purpose that might give us hope:
Yet there's another tradition of American antitrust that may be relevant here. We don't hear much about it any longer, but a century ago antitrust was also concerned about companies becoming so large they distorted the political process. In fact, the danger to democracy posed by large corporations was the primary reason for antitrust laws being enacted in the first place.
Indeed, even at the local level you can see Wal-Mart spending money to influence the political process. But I don't hold out much hope for antitrust actions on political grounds either. Republicans just aren't interested in regulating big corporations anymore and one has to wonder about Democrats as well. After all, our own Senator Hillary Clinton once served on Wal-Mart's Board of Directors. Maybe someday Wal-Mart supporters and corrupt politicians will wake up and see the effects of Wal-Mart not just on our own economy, but the entire world's economy. The question then is will it be soon enough to do something about it.

1 comment:

Anonymous said...

Lynn's article is difficult to read but well worth the time. But I don't expect Wal-Mart to end up in court anytime soon over anti-trust laws. Reagan watered down the laws too much. Add to that the lobbyists Wal-Mart has in Washington. It is my understanding Wal-Mart lobbyists have their own offices in Washington D.C. While we may wait a long time for teeth fo apprear once again in anti-trust laws, we will not wait long for something else.
Eventually Wal-Mart will EXPLODE FROM THE INSIDE ALL ON ITS OWN. And it is already happening.
According to Al Norman,29% of Americans have an unfavorable view of Wal-Mart. But how did Americans come to feel that way?
Perhaps it is because last year a California jury ordered Wal-Mart stores to pay $172 million in damages for failing to provide meal breaks for nearly 116,000 hourly workers as required by law. Maybe it's because of a similar lunch break class action in Philadelphia, Pa. Philadelphia's class action was Hummel vs Wal-Mart Stores. The California case involved roughly 116,000 workers. But the Philadephia case could involve as many as 150,000. In the Philadephia case if each plaintiff got $1,000 Wal-Mart's liability would be $150 million.
And what about ALL the former and current female workers who have a discrimination suit against them? I haven't kept up on that one, but I understand it is the biggest civil suit in history. And there are tons of other cases against this huge corporation. These are only a few. They get sued 2-5 times every single day.
So is Wal-mart going to explode from the inside? It is already beginning to happen.