THE CASE FOR BREAKING UP THE WAL-MART MONOPOLY

BARRY C. LYNN, HARPER'S - It is now twenty-five years since the Reagan
Administration eviscerated America's century-long tradition of antitrust
enforcement. For a generation, big firms have enjoyed almost complete
license to use brute economic force to grow only bigger. And so today we
find ourselves in a world dominated by immense global oligopolies that
every day further limit the flexibility of our economy and our personal
freedom within it. There are still many instances of intense competition
-- just ask General Motors. . .

The idea that Wal-Mart's power actually subverts the functioning of the
free market will seem shocking to some. . . One of the basic premises of
the free-market system is that actors are free to buy from or sell to a
variety of other actors. In the case of Wal-Mart, no one can deny that
every single firm that supplies the retailer is, technically, free not
to do so. But is this true in the real world? After all, once a firm
comes to depend on selling through Wal-Mart's system, just how
conceivable is the idea of walking away? Producers own and maintain
machines, employ skilled workers, lease land and buildings. Even with
careful planning, most would find the sudden surrender of 20 percent or
more of their revenue to be extremely disruptive, if not suicidal. . .

No one can deny that, technically, every firm that supplies Wal-Mart is
free to ask whatever price it wants. But again, we must ask whether this
holds true in the real world. Every producer knows that Wal-Mart is, as
one of its executives told the New York Times, a "no-nonsense
negotiator," which means the firm sets take-it-or-leave-it prices, which
as we know from the previous paragraph are far harder to leave than to
take. Every so often Wal-Mart will accept a higher price, but then the
retailer's managers may opt to punish the offending supplier, perhaps by
ratcheting up competition with its own in-house brands. . .

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