[Source: www.reuters.com, July 10, 2008]
Federal antitrust enforcement has little impact on small firms, according to a study released today by the Office of Advocacy of the U.S. Small Business Administration.
Researchers examined two industries with significant enforcement activity in recent years, retail groceries and timber. They determined that in the retail grocery business small firms did not benefit in markets where the Federal Trade Commission (FTC) required divestiture to offset post-merger concentration.
They also found that the decline in small Pacific Northwest sawmills was due in large part to macroeconomic factors and efficiency gains of the vertically integrated dominant firm.
“Federal antitrust policy has always centered on protecting competition as a whole, and not small competitors,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. “As the report’s case studies make clear, vigorous FTC enforcement of antitrust legislation may not necessarily be helpful for small competitors in affected geographic areas.”
Written by Innovation & Information Consultants with funding from the Office of Advocacy, Analyzing the Impact of Antitrust Laws and Enforcement on Small Business (http://www.sba.gov/advo/research/rs329tot.pdf) analyzes the impact of antitrust activity in the retail grocery and timber industries. Among the report’s conclusions:
* In many markets investigated, small retail groceries declined in both number and market share, regardless of whether there was FTC antitrust enforcement activity.
* The entry of mass merchandisers and efficiency of large supermarkets contributed more to the closure of small groceries than increased market concentration due to mergers.
* Anticompetitive behavior by a dominant vertically integrated timber industry firm contributed to a decline in small Pacific Northwest timber firms; however, macroeconomic factors were equally important in the reduction of small firms.
The Office of Advocacy, the “small business watchdog” of the federal government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats, and it funds research into small business issues.
For more information and a complete copy of the report, visit the Office of Advocacy website at www.sba.gov/advo.
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