Antitrust Rent-Seeking

by on May 4, 2006 · 6 comments

Intel has asked the judge to throw out AMD’s antitrust case against it. I find it hard to understand how a case like this is supposed to benefit anyone but antitrust lawyers. After all, the point of the law is to alter incentives so that people won’t do bad things. Yet that doesn’t seem to have happened in recent high-tech antitrust cases. Microsoft, for example, has adopted the strategy of ignoring the antitrust process entirely, and it’s worked pretty well for them. By the time all the appeals in its browser-tying case had been exhausted, the IE-Netscape battle was ancient history, and the courts had no appetite for aggressive punitive actions. Sure, it costs Microsoft some money in fines and legal fees, but that’s far preferable to neutering themselves by refusing to enter any new market where they might be branded monopolists. Likewise, the EU has levied some big fines against Microsoft, but they haven’t figured out any way to reverse Microsoft’s alllegedly anti-competitive behavior. Microsoft would likely be in much worse shape had they stayed out of the media player market out of fear of anti-trust prosecution.

This AMD-Intel dispute seems to have similar dynamics. The lawsuit concerns conduct by Intel that occurred in the first half of this decade, yet the trial won’t start until 2008 and likely won’t be resolved until a year or two later. Given how murky the law is concerning what is and isn’t legitimate conduct, the logical thing for Intel to do is to ignore the antitrust process completely. They should focus on competing in the marketplace and let the legal department do damage control after the fact.

Which calls into question what the point is in the first place. If companies are going to do what they would have done anyway, what are we getting for those millions of dollars in legal fees?

Comments on this entry are closed.

Previous post:

Next post: