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Source link: http://archive.mises.org/7310/random-acts-of-antitrust/

Random Acts of Antitrust

October 16, 2007 by

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.)

{ 3 comments }

Truth October 18, 2007 at 11:08 am

Your comment indicates that you know little about how the Department of Justice operates. Don’t comment on things you don’t understand.

Don October 18, 2007 at 11:17 am

And just how *does* the DoJ operate? Please enlighten us.

www October 18, 2007 at 11:35 am

§7 Clayton Act, 15 U.S.C. § 18

Acquisition by one corporation of stock of another

No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.

No person shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of one or more persons engaged in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition, of such stocks or assets, or of the use of such stock by the voting or granting of proxies or otherwise, may be substantially to lessen competition, or to tend to create a monopoly.

This section shall not apply to persons purchasing such stock solely for investment and not using the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition. Nor shall anything contained in this section prevent a corporation engaged in commerce or in any activity affecting commerce from causing the formation of subsidiary corporations for the actual carrying on of their immediate lawful business, or the natural and legitimate branches or extensions thereof, or from owning and holding all or a part of the stock of such subsidiary corporations, when the effect of such formation is not to substantially lessen competition.

Nor shall anything herein contained be construed to prohibit any common carrier subject to the laws to regulate commerce from aiding in the construction of branches or short lines so located as to become feeders to the main line of the company so aiding in such construction or from acquiring or owning all or any part of the stock of such branch lines, nor to prevent any such common carrier from acquiring and owning all or any part of the stock of a branch or short line constructed by an independent company where there is no substantial competition between the company owning the branch line so constructed and the company owning the main line acquiring the property or an interest therein, nor to prevent such common carrier from extending any of its lines through the medium of the acquisition of stock or otherwise of any other common carrier where there is no substantial competition between the company extending its lines and the company whose stock, property, or an interest therein is so acquired.

Nothing contained in this section shall be held to affect or impair any right heretofore legally acquired: Provided, That nothing in this section shall be held or construed to authorize or make lawful anything heretofore prohibited or made illegal by the antitrust laws, nor to exempt any person from the penal provisions thereof or the civil remedies therein provided.

Nothing contained in this section shall apply to transactions duly consummated pursuant to authority given by the Secretary of Transportation, Federal Power Commission, Surface Transportation Board, the Securities and Exchange Commission in the exercise of its jurisdiction under section 79j of this title, the United States Maritime Commission, or the Secretary of Agriculture under any statutory provision vesting such power in such Commission, Board, or Secretary.

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