Friday, May 29, 2009

Collusion at the O'Hare Hilton

A reader points to an excellent column by Ben Sheffner in Slate explaining why the newspaper execs now meeting in Chicago may very well be participating in illegal activity.

Antitrust law is complicated, but one principle is very simple: Competitors cannot get together and agree on price or the terms on which they will offer their services to their customers. It doesn't matter if the industry is ailing or if collusion would be "good" for society or necessary to preserve democracy. An agreement regarding pricing is "per se"—automatically—illegal under Section 1 of the Sherman Act, the main federal antitrust law.

All but a few newspapers currently give away their Web content for free. Many would like to start charging but are afraid that if they're the first to make the leap, their readers will abandon them for the remaining free alternatives. One obvious solution would be for them to agree to make a collective leap behind a pay wall.

But such an agreement would be blatantly illegal, says Kenneth Ewing, a partner at Steptoe & Johnson who, as head of his firm's antitrust practice, advises corporations on how to stay out of trouble. "It's Antitrust 101. If you're a competitor of another company, you violate federal and state law if you agree on the price or the general terms on which you are willing to compete."

Doesn't matter if the conspirators had an anti-trust lawyer at the confab -- collusion is still illegal.

Hat tip: Walter Abbott


Anonymous said...

The test question is this:

Substitute Exxon, Shell, Chevron, British Petroleum, etc. for the names listed at the double-secret meeting yesterday in Chicago. What would be the lead story on the network evening newscast?

Walter Abbott

Anonymous said...

You are a joke, and here's the punchline:

E&P article.

John Altevogt said...

And the circulation of E&P in the general populace is.....?

Anonymous said...

All I can say is you heard it here first:

At least MW got the jump on someone first this time.

Anonymous said...

gimme a break!! Collusion and anti-trust!?! Ya kiddin' me? What's the precedent ... When was the last time the feds gave a hoot about anti-trust? If the feds gave a second's thought to anti-trust issues, we wouldn't have so many "too-big-to-fail" institutions that the feds feel the need to bail out ... Whether it's collusion or not, it doesn't matter because the feds long ago gave up the capitalist idea that a free-market approach is the best way to run an economy ...

Anonymous said...

gimme a break!! Collusion and anti-trust!?! Ya kiddin' me? What's the precedent ...

How many would you like?

You may now apologize for your ignorance.

Jay Fredrickson said...

The biggest problem with this whole situation is the timing. Meetings like this should have been held ten years ago. After ignoring the growth of online aggregators for the first years of their existence, the revenue pendulum has now made companies like Google and Yahoo significantly stronger than the entire newspaper business.

Like many other decisions the industry has made, deciding to charge for what the papers produce at this time is too little, too late.
Google and Microsoft can hire as many ex-newspaper reporters as they want for dimes on the dollar.