The story:
When President Obama took office, he vowed a new era of antitrust enforcement, promising to crack down on deals that undermined competition.
Now the administration faces its biggest test.
On Wednesday, the Justice Department sued to block AT&T’s $39 billion takeover of T-Mobile USA, a merger that would create the nation’s largest mobile carrier.
“We believe the combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower-quality products for their mobile wireless services,” said James M. Cole, the deputy attorney general.
The national government was granted the power to either break apart monopolies or prevent their formation since the passage of the Sherman Anti-Trust Act in the late 19th Century. Monopolies tend to be able to set prices wherever they choose and provide products and services at whatever level of quality they desire since consumers have no other options for where to purchase them.
This fits into several places in our class discussions. In 2301 we can talk about this when we discuss the proper role of government, how the Constitution ought to be interpreted, and federalism. For 2302 this is an example of how Congress has expanded the role of the executive branch over time. We can also discuss this when we talk about the judiciary and what factors lead it to interpret the Constitution one way or the other.
For a general discussion question we might want to speculate on whether it is a proper role of government - and if so what level - to ensure there is competition in the marketplace.
- Wikipedia: Competition Law.
- The Concise Encyclopedia of Economics: Antitrust.
- Department of Justice: Antitrust Division.
