Mises Wire

A
A
Home | Blog | FTC and Intel

FTC and Intel

October 22, 2007

Tags InterventionismMonopoly and Competition

Here we go again with real competition being portrayed as anticompetitive. The front page of the San Jose Mercury News reads, "FTC declines to probe Intel” because the head of the FTC is not moving forward with requests by Intel competitor AMD and lawmakers to look into illegal practices by Intel. In addition, South Korea and the European Commission have accused Intel of antitrust violations." Fortunately, Deborah Majoras, the FTC's chairwoman, has rejected the requests to formally investigate Intel. Intel's position is, of course, that AMD is trying to use the government to do what it cannot do itself—defeat Intel in the marketplace. Intel is supposedly acting "anti-competitively" because according to the article it offers "large discounts to computer makers in exchange for not using products by the rival company, Advanced Micro Devices of Sunnyvale, which has struggled to compete and has waged a global antitrust campaign against Santa Clara-based Intel. Japanese officials made similar accusations in 2005."

This is the same nonsense of "trying to monopolize the market" and "predatory" pricing that has been charged against other successful companies. Let me be clear. So what if Intel wants to monopolize the market and be the sole chip producer in the world? The only way it can do this is if consumers continue to make Intel the biggest and best in the business. What AMD is trying to do, like all weaker companies, is to use the government to do for them what they obviously cannot do for themselves. The Mercury News article also claims that, "U.S. antitrust law permits a company to hold a monopoly, but it forbids a company from leveraging its dominance to restrict competition."

 First, the prefix "mono" means one and since AMD is a competitor, then there is no monopoly. Second, trying to "leverage dominance" is competition! Let me be clear: Intel does not hurt or put AMD out of business. I have never met Mr. Intel. It is Intel consumers who are keeping Intel at the top because they think Intel produces a better product at better prices. Finally, and this is a point I made in a previous Mises.org article, so what if a company like Intel wants to "kill off" its competitors? As long as it does not use the power of government to achieve this goal, then that desire is indicative of competition. In fact, this desire is what ultimately benefits consumers.

Of course, critics will argue that if only one firm exists in a market then it will have the power to "overcharge" their customers or "gouge" them or charge "exorbitantly high" prices. I have a question: what is "too high" and what does "exorbitant" really mean? And what or who determines the answers to these questions--some useless mathematical model that bears no resemblance to reality or some bureaucrats in Washington D.C. who are omniscient and know the "true" or "real" price? Moreover, why is it acceptable for consumers to want to pay the lowest price possible but it is immoral when firms want to charge the highest price possible to maximize their profit? The hours of energy and creativity that companies must waste to address antitrust legal issues is a deadweight loss to the economy. In a free enterprise economy, an economy we supposedly have, there would be no antitrust laws (and many other property rights-violating regulations) and true competition would rule the day.

Follow Mises Institute

Add Comment