The anticompetitive effects of vertical integration by cable systems have now reached crisis proportions with the ongoing refusal — already more than five months old and with no end in sight — of Time Warner to license Los Angeles Dodgers baseball games for cable or satellite distribution, or local broadcast, on any network other than its own SportsNet LA programming channel.
By winning the US v. Bazaarvoice trial without showing that post-closing competitive effects in the nascent market it chose to attack had not, in fact, been harmful to consumers, the Justice Department’s success may have done more damage to antitrust law — and the appropriate role for government predictions of market development — than they ever intended.
Making a predictive judgment about future competition in an existing market is quite different from predicting that in the future new markets will emerge.
Although the AT&T/T-Mobile deal has both horizontal and vertical elements, most media and analyst discussion to date has focused on direct competition for wireless subscribers, the classic horizontal concentration question. Regardless of the result there, observers can expect behavioral injunctions, whether by DOJ consent decree or FCC “conditions” to approval, addressing the deal’s vertical factors.
The airline industry charges lower prices today than a decade ago, despite substantial consolidation and massive, billions-per-year operating losses. As a matter of economics, those facts teach that the market is highly competitive. Some antitrust Neanderthals may disagree, but they are reading from a hymnal that no longer has much spiritual resonance.