- REASON LEllERS Publisher Robert W Poole, Jr Editor Virginia I Postrel Assistant Editors Charles Oliver Jacob Sullum Asst. Managing Editor Rick Henderson Art Director Andrea Reibsamen Production Editor Eric K Gill Washington Editor Martin Morse Wooster Editorial Assistant Mary Toledo ~ ~ The lTC is committed to enforcing the Phssociate Publisher Bryan E Snyder antitrust laws in ways that make Circulation Director Steve Willard economic sense and benefit consumers. PUbliC Affairs Director Kevin D Teasley Food Fight Advertising Manager David Meleney The commission places great weight on Thomas J. DiLorenzo (“Turning Back the the 1982 Department of Justice Merger Contributing Editors Doug Bandow Tom Bethell Clock,” Nov.) called the Bush Guidelines when deciding whether to James Bovard David Brudnoy administration’s antitrust policy a retreat challenge an acquisition. As the Steven Hayward Thomas W Harlett from the economic common sense cham- guidelines note-and our actions sup- [David R Henderson T A Heppenheimei John Hood Loren E Lomasky pioned by the Reagan administration. Mr. port-concentration figures alone do not Mchael McMenamin Steven W Mosher DiLorenzo uses as his sole support the make a merger anticompetitive. The com- Stanton Peele Thomas Szasz Federal Trade Commission’s action chal- mission made the right decision to chal- William Tucker Paul H Weaver Walter E Williams Karl Zinsmeister lenging Red Food Stores’ acquisition of lenge the acquisition and to accept a the Chattanooga Kroger supermarkets. settlement that will increase competition Editorial, Advertising, and Production Offices President Reagan appointed all of the in the Chattanooga market. 2716 Ocean Park Blvd , Suite 1062 commissioners who voted to challenge Kevin J. Arquit Santa Monica, CA 90405 the acquisition. Later, Bush appointees (213) 392-0443 Director approved a settlement of the complaint Bureau of Competition Washington Office Circulation Service that the Reagan-appointed commission Federal Trade Commission PO Box 8093 PO Box 526 Silver !Spring. MD 20907 Mt Morris, IL 61054 had issued. Washington, DC (301) 565-7820 (815) 734-6309 Additional inaccuracies and half- truths fill the article. For example, the Mr. DiLorenzo replies: Rather than Founding Editors: lTC never alleged that competition and defending the Bush appointees to the Manuel S Klausner, Tibor R Machan, Robert W Poole, Jr low prices kept new supermarkets from FTC, Mr. Arquit has damned them with entering the Chattanooga market. The his faint praise of their actions in the Red REASC’N is published by the Reason Foundation. a RCchallenged the acquisition because it Food case. He boasts that the only action 501(c)i:3) nonprofit educational foundation engaged unduly increased concentration in the taken by the Bush appointees “was to in public-policy research. Contributions to the Chattanooga market and made entry dif- approve a settlement of the complaint.” Reason Foundation are tax-deductible Signec articles in REASON reflect the ficult. Indeed, Red Food Stores’ internal But the “settlement” was apparently views of the authors and do not documents showed that it made the ac- forced on Red Food after a district court necesaarily represent those of the Audit43 Bureau quisition to preempt entry and expansion judge had thrown the case out, arguing editors. the Reason Foundation, of Circulations or its trustees. Member by its competitors. Red Food did not have that “the lTC has not shown a likelihood any efficiency reasons for buying addi- that Red Food, if it acquires the Kroger tional stores. stores, will be able to exercise market rFr1Reason Foundation In addition, the commission did not power.” The judge also noted that the overlook past entry by “grocery giants” merger would save 400 jobs. Trustees: Bernard Baltic. Frank Bond, Joseph E Coberly, Joseph H Coulombe. A&P, Wint-Dixie, and Giant Foods into Former FTC chairman and Reagan ap-, Robert W Poole, Jr. Tony Jackson, Norman Karlin. Manuel S Klausner, Chattanooga. These and other chains pointee Daniel Oliver strongly objected David H Koch, Robert W Srniley, Jr were not successful, suggesting that entry to bringing the case in 1989 on the basis Presidmt: Robert W Poole, Jr into the market was not easy. that it “was not supported by commission Senior Vice President: Bryan E Snyder Finally, Mr. DiLorenzo refers to a precedent, applicable case law, economic Vice Pwsident, Research: Lynn Scarletl Chamber of Commerce survey for one theory or the realities of the Chattanooga Director of Public Affairs: Kevin D Teasley quarter in 1988 showing low grocery market ....It’s a throwback to an earlier era Director of Educational Programs: Greg Rehmke prices in Chattanooga. Yet before that when the commission was more con- Bookkeeper: Ellen Baker Office Manager: Donna Lee Braunstein quarter, surveys usually showed that cerned with abstract measures of con- Public Affairs Assistant: Mario E Clemente Chattanooga’s grocery prices were centration than with competitive realities Research Fellow: Nick Davis higher than its general cost of living and consumer welfare.” Volunteers: Mike Griffin. Kitty Hedrick,Mark Lewis index. In fact, in 1987, Chattanooga’s Bush antitrust appointees have Steven i’iper. Gayle Teufel grocery prices were higher than the reverted back to the “bad old days” when Legal Adviser: Don Franzen nation’s average. market concentration was used (and 10 reason MARCH 1991 LETTERS You deserve a factual look at ... Hussein and Arafat - Birds of a Feather EHow they engineered the bloody events in Jerusalem abused) as a measuring rod of competi- On Monday, October 8,1990,on the Jewish festival of Succoth, about 20,000 Jews assembled for tion. Mr. Arquit’s reference to “unduly prayer at the Western Wall in Jerusalem, the holiest place in the Jewish religion. Two mosques are also located on Temple Mount, high above the Wall. Because of the indulgence and respect increased concentration” implies that he for other religions, the Israeli authorities allow them to operate freely and fully under the possesses special knowledge of the “cor- jurisdiction of Moslem religious authorities. Suddenly and without any provocation, whipped into a frenzy by their clerics, a raging mob of 4,000 Moslem Arabs stormed out of the mosques rect” amount of market concentration. and loosed a barrage of rocks, bricks, and Molotov cocktails on the worshipping crowd below The idea that any individual can possess them. Twenty-eight people were severely injured. By miracle, nobody was killed. The mob then attacked the Israeli police post and set it afire. The police responded, first with tear gas and then such knowledge is an example of Hayek’s rubber bullets. When those ran out and when 40 police were at the point of being lynched they “fatal conceit,” which pervades antitrust opened fire with live ammunition. Twenty Arabs died and twenty martyrs had been created. that a few hundred Jews would also die in that thinking, especially among lawyers. What are the facts? fusillade of rocks. But, by great good fortune, Mr. Arquit’s condemnation of Red =There is no question in anybody’s mind that that turned out not to be. Food on the grounds that its “documents the bloody incident was engineered and orga- .One ofSaddamHussein’sandYasserArafat’s nized by Saddam Hussein, the “Butcher of main themes is the linkage of any possible showed that it made the acquisition to Baghdad”, and Yasser Arafat, the master ter- withdrawal from Kuwait with a demand for preempt entry” suggests he believes that roristand “president”of the non-existent state Israeli withdrawal from the “West Bank. This of“Pa1estine’.After virtually every Arab leader is a ludicrous proposal and, so far at least, a company can be found guilty of violat- has turned against Hussein, Yasser Arafat re- most of the Western.world has called it just ing the antitrust laws merely by having mains steadfastly loyal to him. And why not? that. If the world’s minorities problems must the “wrong” intentions, as defined by Both have the destruction of Israel at the very be solved, why not address the “Irish ques- top of their agendas -- in fact Arafat has no tion”, which has been festering for centuries? government overseers, regardless of the other agenda; he surely doesn’t care at all Why not settle thc !e-old grievances of the effects of its actions. It is ominous that about the fate of Ku- Basques, those of the wait. The bloody inci- ethnic Albanians in antitrust regulators like Arquit believe in dent on the Temple Yugoslaviaand, closest prosecuting businesses based on Mount served the pur- to home and right in poses of both. They Iraq, the justified de- presumptions about the businesses’inten- rightly expected that spair of the Kurds, tions rather than their actual behavior. it would take, at least whose aspirations Mr. Arquit displays a misunderstand- temporarily, the heat Saddam Hussein and the focus off “solves” by poison gas- ing of basic economic principles when he Saddam Hussein and sing thousands, and by says that Red Food “did not have any had the potential to forcefully relocating weaken the tenuous the rest? Iraq has an- efficiency reasons for buying additional common front be- nexed Kuwait in an act stores.” Voluntary trade is efficient when- tween the United of aggression moti- States and our new- vated by greed. Israel ever both traders are better off-other- found Arab “allies”. As came to administer wise they wouldn’t trade-and no one is to Arafat, the incident (not to annex!) the worse off. The Red Food merger was was certain to put the Birds of a Feather: Saddam Hussein and Yasser “West Bank and the problem,,, Arafat, twoenemiesofthe U.S. in lovlngembrace. Gaza strip as the result certainly efficient in this sense. which because of the ofitsvictory in the Six- The grocery business also has sig- troubles in the Gulf had taken a back seat, Day War.