Report to the International Scientific Conference "Economics and bureucracy in an open society" (Lviv 30.09.2011)

1. The
Limits
of
Antitrust
in
a
Developing
Country:
the
Austrian
View
Vadim
Novikov

2. Disclaimer:
I
write
expert
opinions
for
antitrust
litigations

3. What’s
the
cost
of
antitrust?
Cost
Benefits

4. Free
cheese,
anyone?

5. Traditional
view:
benefits
outweigh
cost
Cost
Benefits

6. What
are
the
benefits?

7. John
Sherman
1823–1900

8. The
coal
trust s
one
dollar
per
ton
increase...

9. In
1890
trusts
were
everywhere:
Coal
Iron
Sugar
Paper
Zinc
Oil
Steel
Salt
…

10. Price
fixing

11. What
is
the
reality?

12. In
1890-­‐1990
most
monopolized
industries
grew
faster
than
average
Real
GNP
Sugar
Coal
Zinc
Steel
Source:
Thomas
DiLorenzo,
The
Origins
of
Antitrust
Rhetoric
vs.
Reality"
Regulation,
Volume
13,
Number
3,
Fall
1990

13. Prices
in
monopolized
industries
went
down
Overall
Lead
Zinc
Sugar
Steel
Source:
Thomas
DiLorenzo,
The
Origins
of
Antitrust
Rhetoric
vs.
Reality"
Regulation,
Volume
13,
Number
3,
Fall
1990

14. What
about
current
economy?

15. The
scope
of
the
competition
law
does
not
have
a
statistically
significant
impact
on
purchasing
power
parity...
Source:
Keith
N.
Hylton,
Fei
Deng
,
Antitrust
Around
The
World:
An
Empirical
Analysis
Of
The
Scope
Of
Competition
Laws
And
Their
Effects ,
Antitrust
Law
Journal
No.
2
(2007).

16. Although
for
the
time
being
the
sugar
trust
has
perhaps
reduced
the
price
of
sugar
[...]
that
does
not
alter
the
wrong
of
the
principle
of
any
trust.
—
Sen.
Edwards

17. Antitrust
Anti-­‐price-­‐cutting
legislation

18. The
'trusts'
[...]
have
destroyed
legitimate
competition
and
driven
honest
men
from
legitimate
business
enterprises.
—
Congressman
William
Mason

19. Antitrust
Anti-­‐too-­‐much-­‐
competing
legislation

20. What
are
we
really
afraid
of?

21. Concentration
of
power

22. The
market s
invisible
hand
in...
developed
developing
countries
countries

23. Antitrust
anti-­‐oligarchy
law

24. Impact
of
the
law s
scope
suggest
that
it
has
a
positive
impact
on
perceived
competitive
intensity...
Source:
Keith
N.
Hylton,
Fei
Deng
,
Antitrust
Around
The
World:
An
Empirical
Analysis
Of
The
Scope
Of
Competition
Laws
And
Their
Effects ,
Antitrust
Law
Journal
No.
2
(2007).

25. Antitrust
legislation
illusion

26. What s
the
price?
perceived
competit
ive
intensity

27. 1
Enforcement
&
compliance

28. Antitrust
cases
in
Russia
3,000
2,500
2,000
1,500
1,000
500
0
1996 1998 2000 2002 2004 2006 2008 2010

29. More
budget
=
more
cases
3,000
2,500
R² = 0.91
2,000
1,500
1,000
500
0
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000

30. Law
enforcement
in
developing
countries:
militiaman
corrupt
militiaman
shot
free
rider
militiaman
beating
grannie
militiaman
corrupt
lyrics

31. One
of
many
questions
I
had
to
answer
as
an
expert:
If
the
size
of
compensation
for
purchasing
a
certain
amount
of
goods
under
a
contract
for
delivery
of
foodstuffs
is
equal
for
all
the
suppliers
of
a
certain
category
of
foodstuffs,
differing
in
size
depending
on
the
certain
amount
of
the
goods
purchased
for
each
of
the
suppliers,
are
the
purchasing
terms
for
this
supplier
equal
to
other
suppliers
with
the
same
terms
for
the
size
of
compensation,
as
long
as
the
purchasing
price
and
retail
price
are
not
equal?

32. This
is
a
cruel
and
unusual
punishment

33. 2
The
Boeing
effect

34. William
Boeing
1881–1956

35. After
his
company
was
split,
Boeing
retired
and
spent
next
20
years
breeding
horses.

36. Antitrust
law
demotivates
entrepreneurs

37. 3
The
pitfall
of
deficit

38. Regulating
the
price
might
actually
work!
Willing
to
sell
10 20 30 40 50 60 70 80 90
Willing
to
buy

39. Unfortunately,
it
might
blow
the
whole
deal
too.
Willing
to
sell
10 20 30 40 50 60 70 80 90
Willing
to
buy

40. The
appropriate
comparison
is
not
between
an
existing
product
supplied
at
a
high
price
and
that
same
product
supplied
at
a
low
price.
It
is
between
a
product
supplied
at
high
price
and
no
product
at
all.
—
Stephen
Littlechild

41. It s
easy
to
see
at
this
level…

42. Not
so
easy
here.

43. Antitrust
law
creates
deficits

44. Isn’t
the
cost
a
bit
too
high?
B enefits:
ts:
Illus ions
Cos ment
job
Enforce hip
My
epren eurs
Entr
Defi cits

45. What
happens
if
you
abolish
anti-­‐
trust
legislation
in
a
developing
country?

46. Georgia
actually
did
it.
Nothing
happened.

47. Abolish
antitrust
now!

49. www.inliberty.ru

50. www.mises.org

51. Vadim
Novikov
vadim.v.novikov@gmail.com
+7
(985)
991
4810