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Executives Are Being Jailed for Pricing Their Own Products

When I speak to audiences about the evils of antitrust, people are sometimes startled to learn that executives are serving time behind bars for violating the Sherman Act of 1890 and other antitrust statutes. In 2012, for example, two executives of AU Optronics Corp., a Taiwanese manufacturer, were sentenced to three-year jail terms. Their crime? Setting the prices of their own company’s liquid crystal display screens.

Ah, but it’s not that simple, say the antitrust experts. The company didn’t just set prices for its own products in isolation. It did so with the knowledge and agreement of other companies, which supposedly transformed a decision to set its own prices into a dastardly “conspiracy” to “fix” prices.

The Department of Justice, which prosecuted the AU Optronics executives, says the company’s price decisions resulted in consumers having to “pay more” for LCD screens. More than what? More than customers would have preferred to pay. But so what?

Nobody except the producer of goods and services has a right to control the prices at which those products are offered for sale. A consumer’s only right is to buy or not buy — or to negotiate a better price if he can. A competitor’s only right is to persuade customers that his product offers better value.

According to the DOJ, AU Optronics and its fellow producers conspired to “rob [American consumers] of their hard earned money.” No, they didn’t. Robbery means taking another’s money by force, without the victim’s consent. But when an American consumer chooses to pay $300 for a TV set, he consents to the transfer of his “hard earned money” to the seller. End of story — no robbery there.

Might he have preferred to pay $250 instead of $300? Of course. But nobody has a right to demand that goods carry the prices he prefers. Nor has anyone a right to dictate the logic by which a company sets its prices, even if it decides to set prices parallel with other firms.

By calling such agreements “conspiracies,” the antitrust experts want you to lump together the price decisions made by businessmen with the criminal plots laid by thieves and murderers. But these are two entirely different categories of action. When criminals scheme to violate others’ rights by physical force, only force in retaliation can stop them and protect the innocent. But businessmen have no means of forcing anyone to pay the prices they ask, and so they present no threat that justifies government action.

America is not ancient Rome, and American businesses are not rightless gladiators who can be flung into an arena and forced to compete when they would rather cooperate. As long as the legal system allows complete freedom of competition, economic cooperation violates no one’s rights.

In 1961, Ayn Rand publicly spoke in favor of ending all criminal antitrust penalties, as the first order of business in a campaign to eventually abolish antitrust altogether. I think her proposal deserves a fresh look in 2014.