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State-Sponsored Competition Is New Antitrust

Stocks in this article: LUV AMR LCC MSFT AAPL TWC NWS

"A lot of the traditional cases attached to those issues have to do with control over infrastructure," Ghosh says. "Being able to create bottlenecks in infrastructure could be viewed as anticompetitive."

Yet, increasingly, companies are working around these bottlenecks. Instead of fighting Cablevision, Time Warner Cable (TWC), Comcast (CMCSA) and others for use of their cable, direct-satellite providers innovated their way around cable to a full third of the multichannel market. Are there still dominant players in some markets, such as Verizon Wireless and its more than 30% share and its vaunted 3G coverage area? Yes, but AT&T (T), T-Mobile and Sprint (S) have responded by updating their own networks and handsets rather than calling for Verizon's head.

"Antitrust law historically has responded to advances in economics," says D. Daniel Sokol, assistant professor of law at the University of Florida's Levin College of Law. "Unlike the 1950s or 1960s, antitrust today does not assume that merely because you are big, you are bad: You have to harm consumers."

Disgruntled fliers believe the mergers of Delta and Northwest, United and Continental and even Southwest and AirTran (AAI) do just that. It's a move toward monopoly measured in added booking, baggage, seating and meal fees and subtracted pillows, drinks, entertainment and routes. Compared with the days before the Airline Deregulation Act of 1978, however, getting to choose a carrier such as JetBlue or Alaskan seems more like a gift than a burden.

"Basically there were limited carriers and the government set the rates and, at the high point of regulation, the routes," Ghosh says. "A lot of the airline disputes from a couple of years ago had to do with the reservation system or the use of hubs, which are more infrastructure technology questions."

This is what competition has come down to: Who controls the infrastructure and how competitors can work around it. A big part of that answer lies within Congress and with regulatory agencies themselves. The telecom industry is "deregulated," for example, but everyone from Verizon to Vonage (VG) has to pass muster with the FCC and other agencies. As seen in portions of the health care debate and inquiries into Monsanto's hold on seed and weed killer markets, the concept of competition has become increasingly political, with Washington's yea or nay meaning the difference between satellite-based Wi-Fi in planes or customers being stuck in a SkyMall-only flight information bubble for another decade. The old paradigm was not to compete, with Uncle Sam's blessing. The new strategy is to fight the bully straight on, with government approval. "One view is that antitrust and regulation are substitutes, so if you have a regulated industry there's no need for antitrust because the regulation is doing the monitoring, and in deregulation antitrust performs regulation's function," Ghosh says. "Another view is that regulation and antitrust may be substitutes, but that doesn't necessarily tell you anything about deregulation, because it's simply new types of regulation."

-- Written by Jason Notte in Boston.



>To contact the writer of this article, click here: Jason Notte.

>To follow the writer on Twitter, go to http://twitter.com/notteham.

>To submit a news tip, send an email to: tips@thestreet.com.

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Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.
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