Antitrust law has gone through five phases:
1. Early years (1890-1914). The Supreme Court rules that Standard Oil and American Tobacco are monopolies but allows other big firms (Du Pont, International Harvester) to remain intact. In 1912, the Court rules that a railroad terminal in St. Louis has to open the terminal to all shippers, an important precedent later used to create "equal access" laws for network industries.
2. Laissez-faire (1915-36). The Court, in its most lenient state, fails to order a U.S. Steel breakup and, in 1927, rules that the FTC has no authority to order Eastman Kodak to sell anticompetitive assets.
3. Increased activism (1936-72). Congress outlaws price discrimination with the Robinson-Patman Act (1936) and, in the Celler-Kefauver Act (1950), forbids companies to consolidate assets even if the consolidation doesn't create a dominant firm. The Court prohibits mergers that would create firms with a 4.5 percent market share.
4. Increased leniency (1973-91). With the notable exception of the AT&T breakup (1982-84), the courts, under the influence of noted "law and economics" scholars Robert Bork, Richard Posner, and Frank Easterbrook, offer firms more freedom to merge. But at the same time, the courts use factors other than market share, including long-term contracts with suppliers and R&D and advertising budgets, to determine whether a merger is anticompetitive.
5. Synthesis (1992- ). Under the Clinton Administration, the courts and the Justice Department use game theory and other technical methods to reject mergers. They increasingly grant leniency to the first member of an alleged cartel to provide incriminating information against rivals. In 1999, for example, the Justice Department levies $750 million in fines — more than has been assessed in all cases since the Sherman Act's creation — against BASF AG and Hoffman-LaRoche Ltd. for fixing vitamin prices, after Rhône-Poulenc SA gives up the conspirators.
But as international business practices become more complex, can regulators determine precisely which corporate practices are anticompetitive? Can regulators create rules that ensure a stable and predictable base for designing business plans? The recent Microsoft and American Airlines antitrust cases, the authors conclude, "place a premium on the ability of the antitrust system to do both of these things."
Taking the Pain out of Layoffs
Gary Charness and David I. Levine, "When Are Layoffs Acceptable? Lessons from a Quasi-Experiment," Industrial and Labor Relations Review. New York State School of Industrial
and Labor Relations, Cornell University, April 2000. www.ilr.cornell.edu/depts/ilrrev/
The most painful part of a manager's job is laying off workers. Economists Gary Charness, of Spain's Universitat Pompeu Fabra, and David I. Levine, of the Haas School of Business at the University of California (Berkeley), suggest there are proven methods to make layoffs less painful.
Mr. Charness and Mr. Levine asked several hundred workers in Silicon Valley, Vancouver, and Toronto to rate three scenarios: "gentle layoffs" (four weeks' pay, severance based on seniority, outplacement assistance), "harsh layoffs" (two weeks' pay, no other benefits), and "labor hoarding" (no layoffs and frequent relocation).
Based on the survey, Mr. Charness and Mr. Levine offer bosses the following suggestions:
Keep workers informed. Workers are more likely to accept a layoff if they're told far in advance that hard times might be coming. Among the more acceptable reasons for laying off workers: a downturn in product demand and technological change.
Share the pain. Laid-off workers are more likely to trust a CEO who takes a pay cut during a downturn. Conversely, workers don't mind when their boss receives a substantial compensation package in good times, as long as executive compensation is tied to corporate performance.
Labor hoarding isn't necessary. In the New Economy, most workers don't expect jobs for life, particularly if the price of a lifetime job is having no control over where one lives.