Antitrust In the News This Week
A few potentially questionable business strategies in the news this week, plus more on the Amazon-Hachette dispute.
This WSJ article explores a movie theater industry practice known as “clearance” in which big theaters insist on exclusive rights to screen movies in their particular market. The big theaters insist the practice helps with costs and actually provides for increased competition, but smaller chains are upset. One such chain filed suit in Atlanta in January, and while not the subject of a formal investigation, the Journal reports that DOJ officials have been “seeking information on the issue.”
CVS, which recently stopped selling tobacco at its own stores, is “offering a prescription-drug plan that charges patients more if they buy their medications at pharmacies that sell tobacco products…” A group of smaller pharmacies is crying foul, calling the move an unfair competitive practice, and the WSJ articles quotes an antitrust attorney who sees potential merit in the claim. An FTC investigation into other CVS Caremark marketing tactics was closed in 2012 without action.
More on Amazon
As Amazon’s dispute with Hachette stretches on, the company continues to be the subject of media scrutiny. In the New Republic, Franklin Foer writes that Amazon must be stopped and laments the “trail of destruction” left by Amazon. Predatory pricing claims are of course very tough to win, a point Foer acknowledges by drawing a comparison to a time 100 years ago, when “the law was not up to the task of protecting the threats to democracy posed by monopoly…” In a similar vein, Paul Krugman’s column in Monday’s New York Times compares Amazon’s success to Standard Oil’s, and talks about Amazon’s monopsonist, “robber-barron-type market power.”
Taking the opposite view, Matt Yglesias writes that Amazon is doing the public a service by wiping out book publishers. Moreover, Yglesias argues that Amazon in fact faces quite a lot of competition in e-books from companies like Barnes & Noble, Apple, and Google.