Random Acts of Antitrust
On September 24, the Anchorage School District (ASD) in Alaska transferred its bus contract from First Student, Inc. to Forsythe Transportation, Inc. The U.S. Department of Justice, obviously on break from its goals of pursuing terrorists and child pornographers, ordered ASD to change bus vendors because First Student's parent company acquired Laidlaw International, Inc., which holds the bus contracts for several other Alaska school districts. The DOJ's Antitrust Division feared a monopoly for Alaska school bus contracts, thus it took proactive measures to "help ensure continued competition for school bus contracts in Alaska after the merger to the benefit of Alaskan taxpayers."
I almost pity the DOJ lawyers and staff that participated in this random act of antitrust. Far removed from the glory of trying to breakup Microsoft, Antitrust Division lawyers have been reduced to bullying local school districts--their fellow bureaucrats!--in a feeble attempt to assert the government's commitment to "merger enforcement."
Technically there was no official action. The DOJ did not file its customary complaint and "consent decree" with the appropriate federal court. Instead, the DOJ, the companies, and ASD did everything behind closed doors, and the DOJ announced the result afterwards. This means there's no official DOJ explanation or justification, just a broad pronouncement that Alaska taxpayers have been spared a horribly injustice.
Luckily, the Anchorage School District left a small paper trail. A memorandum prepared for the school board by ASD officials provides some insight into what took place:
On August 30, 2007, the Director of Transportation participated in a conference call with Sarah Wagner, an attorney from the Department of Justice, Ed Sniffen from the Alaska Attorney General’s office, and the District’s legal counsel. The purpose of the call was to determine the involvement of the DOJ and AG’s office in evaluating the companies that were potential buyers of the First Student operations in Anchorage. The DOJ and AG’s representative indicated that they evaluated the potential buyers and were satisfied that they have the ability to take over the operation immediately and offer competitive bids in the future.
Now, I really do feel bad for the ASD officials who had to spend their time--their taxpayer-paid time--appeasing the DOJ and the Alaska AG's office. It's just a guess, but it's unlikely Ms. Wagner and Mr. Sniffen know much about transporting students in an urban school district. Unless that's something you learn in law school.
The lingering question is what would have happened if ASD refused to assign the contract. Would the DOJ have then sued ASD to compel them to pick a new bus vendor? That certainly wouldn't seem "pro-consumer," but then again neither does forcing school officials to spend their resources on redoing a contract that wasn't set to expire for another four years--because the DOJ was unhappy that other Alaska school districts were using the same vendor.
And the other obvious absurdity is that ASD is itself a monopolist. Where is the Antitrust Division's commitment to protecting Alaskan taxpayers from the estimated $700 million they're forced to spend annually on ASD? And ASD itself deals with a number of monopoly vendors, including the Teamsters that supply labor to the bus vendor, and of course the Alaska Education Association, which controls the supply of teachers (and which participated in a lawsuit to force Alaska to confiscate even more taxpayer funds to "invest" in the schools.)