Competition restored? When companies must undo a merger.

The FTC can decide that a merger must be undone, even years after its completion.

The FTC can decide that a merger must be undone, even years after its completion.

Company A acquires Company B. Two years pass. An FTC administrative law judge decides the merger was bad for consumers — largely based on the testimony of “experts” who happen to be FTC employees. He says the merger should be undone. By restoring the market to its earlier state, things will be better.

That’s not the end of the story. Company A can appeal. And if they win their appeal, the FTC can appeal. And so on and so on. Eventually, six or seven years may elapse before the merger is undone and the market “restored” to its earlier form. This system, we’re told, is far superior to a free market, where there would be no FTC to challenge private mergers in the first place.

This is a real case. The details are largely irrelevant. It all comes down to a simple question: Is “competition” a static condition or a dynamic process? The FTC thinks it’s the former, that competition is like a fixed point on the time-space continuum that can be “restored” to prevent change. Certainly, it’s easier for government agencies to plan the economy this way: Just identify the point in time where “competition” was at its greatest level, then use the authority of the state to fix the industry’s structure accordingly. No mess, no fuss.

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