Like applying leeches to the afflicted, antitrust affords pleasures to its practitioners and otherwise has little value.
The latest demonstration comes from Europe’s bustling trustbuster, Neelie Kroes. Her $1.45 billion fine levied on Intel is vapourware in the first place, since collection would occur years from now only if a court agrees. Not a whit of due process has yet taken place: Kroes’ agency acts as prosecutor, judge and jury. One day the media will figure out that findings delivered under such circumstances are not a judicial outcome, and not deserving of the news fanfare they now receive.
Intel’s competitor, Advanced Micro Devices (AMD), along with its customers, is cast as a victim of Intel’s practice of using volume discounts, rebates and loyalty programmes to (allegedly) induce the Dells and Hewlett-Packards of the world to restrict their purchases of AMD chips.
Already this is a falsification of the chip business. Intel’s volume rewards do not control buyer behaviour, but do reflect the reality that Intel is the industry’s dominant supplier of capital and productive capacity, requiring sufficient volume to justify the increasingly astronomical cost of designing and mass-producing the next generation of chips in line with Moore’s law.
But Intel’s customers also depend on the continued existence of AMD to discipline Intel’s pricing. This fact goes a long way towards explaining AMD’s ability to survive and raise capital despite legendary production snafus and gigantic losses. Chip buyers have a strategic interest in buying AMD chips, regardless of any Intel volume discounts. Dell, HP, IBM, Sun, Cray and others lined up two years ago to buy AMD’s ill-fated “Barcelona” chip. Intel customers all, they were set to roll out 50 new systems based on the AMD chip—which AMD failed to deliver.
It’s true that Intel’s pricing has been a constant invitation to the leech bearers, who see textbook “monopolist” behaviour. Japan and South Korea preceded the European Union in gestures of disapproval.
Even Intel recognizes that it needs AMD—which is why the two primary chip makers have basically created an intellectual property consortium in which they share their secrets while keeping the outside world at bay.
Christine Varney, antitrust chief at the Obama justice department, gave a speech last month conspicuously revoking the Bush administration’s guidance on what activities would trigger antitrust inquiry— and replaced it with nothing. The more or less avowed goal was to create uncertainty in business, a wonderful fillip to the billable hours of all who make their living in the antitrust vineyards. Here, now, is an invitation to weak competitors everywhere to line up at Varney’s door to complain about stronger rivals, who must equally line up to pay tribute to Varney as the new arbiter.
We hereby retire the leech metaphor. Munchausen syndrome is the term for those who fabricate symptoms or intentionally induce illness to make themselves the centre of attention. Neither the public nor the economy will have any reason to be grateful to Varney or Kroes, but the antitrust bar certainly does.
THE WALL STREET JOURNAL
Edited excerpts. Holman W. Jenkins, Jr, is a WSJ columnist. Comment at email@example.com