On the Wall Street Journal’s op-ed page today, Jeffrey N. Shane argues that the big merger between American Airlines and US Airways should be allowed to go through. One by one, Shane sorts through all the typical arguments trotted out in antitrust litigation—concerning “consumer welfare,” jobs, and competition—and shows why blocking this merger makes no economic sense.
But Shane’s argument, while thorough and convincing as far as it goes, is ultimately futile, because it ignores an underlying dynamic of antitrust law.
America’s antitrust laws are not designed to be obeyed. These inherently vague, elastic, non-objective laws are designed to leave businessmen in a chronic state of uncertainty, so that when major business decisions need to be made, executives must look to government for permission to do business.
Shane seems genuinely puzzled about why three previous airline mergers were approved, whereas this one was targeted for elimination. The mistake is to assume that logic has anything to do with it. Quite the contrary: The absence of logic is crucial. Only if arbitrary enforcement makes obedience impossible can antitrust’s reign of quiet terror over businessmen be maintained.
The Justice Department’s attack on this merger is perfectly consistent with making businesses understand that however hard they try, they act by permission, not by right. In the face of that imperative, all Shane’s arguments about economics, consumers, jobs, and competition amount to nothing.
The airlines themselves seem to understand these realities better than Shane does. Settlement negotiations have reportedly begun, with the airlines offering to surrender valuable gate slots at important airports like Reagan National in Washington, D.C., in exchange for an end to the federal lawsuit that’s scheduled for trial starting November 25.
Now we’re talking. That’s language regulators can understand. Whenever businesses show themselves willing to beg, crawl, give up, sacrifice, obey—that’s when the antitrust establishment can start to relax, secure in the smug certainty that its arbitrary power over the business world remains intact.