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It Isn't FTC's Job to Stifle Competition

July 06, 1986

During the Reagan Administration, there has been an apparent tendency toward laissez faire in matters of commerce. The Federal Trade Commission has not seen fit to nullify the merger of the Santa Fe and Southern Pacific railroads, nor has it found fault with the General Electric buyout of RCA.

Therefore, it is somewhat surprising that the FTC now is on record as being against mergers in the soft drink industry--Pepsico taking over Seven-Up, and Coca-Cola doing likewise with Dr Pepper. The public's interest in the beverage mergers seems minor in comparison with the GE/RCA and Santa Fe/Southern Pacific deals.

The death of Southern Pacific inevitably will eliminate competition for delivery of certain goods and thus result in higher prices. On a per-capita basis, this could easily amount to hundreds of dollars per year.

Similarly, with the RCA nameplate and marketing entity being obliterated, General Electric will be able to further its dominance in the appliance and electronic equipment industries. Without having to compete with an opponent of similar size and vitality, GE will find few obstacles in its way to assume a de facto monopoly in the distribution and sale of such items as refrigerators, washers, dryers, televisions and the like. The price of GE products, which could become the only brand of some products available, would be free to go as high as the mega-corporation dictates.

As for the soft drink merger questions, even in a worst-case scenario with Pepsi and Coke able to absorb their current competitors, the impact on the public would be minimal. Each would still be forced to contend with the other, plus various regional and specialty brands as well as the supermarket generics. Even if soft drink prices rose, this would represent little genuine harm to the consumer. Carbonated beverages are a luxury item, not a necessity like a freezer or a furnace; the latter two, of course, are often delivered by railroad.

Competition helped make the United States the land of plenty that it is. The FTC should not be helping to stifle competition. Let every company earn its success through superior performance, not inequitable financial might.



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