Marketplace 4/21/04
Wal-Mart is America's largest corporation, with a whopping $256 billion insales last year. It's also the largest employer in the United States, withover a million American workers. And that's not including millions moreAmericans who work for companies that exclusively supply Wal-Mart.
Is Wal-Mart too big? Not according to America's antitrust laws, whichconsider only one thing - whether a company is so big it drives competitorsout, thereby forcing consumers to pay more. Wal-Mart is huge but it stillrepresents only 8 percent of retail sales in America. That's not nearlyenough to reduce competition. And no one can accuse Wal-Mart of forcingconsumers to pay too much. The company's entire strategy is to chargeconsumers as little as possible, by using computerized ordering anddistribution systems, paying its employees extremely low wages, andsqueezing its suppliers. These cost-cutting measures may hurt localretailers that can't meet Wal-Mart's low prices, and they're not popularwith all employees and suppliers, but Wal-Mart consumers are the clearbeneficiaries.
Yet there's another tradition of American antitrust that may be relevanthere. We don't hear much about it any longer, but a century ago antitrustwas also concerned about companies becoming so large they distorted thepolitical process. In fact, the danger to democracy posed by largecorporations was the primary reason for antitrust laws being enacted in thefirst place.
By this criterion, Wal-Mart may indeed be too big. Its size gives it hugepolitical clout. Recently, when its plan to open 40 "super-centers" inCalifornia ran into a buzz saw of local political opposition, Wal-Martresponded in kind - even financing local ballot initiatives to overturnzoning laws. In March, following one hard-fought campaign, voters in ContraCosta County reversed a county ordinance banning super-centers. Nationally,Wal-Mart's Political Action Committee is now the second-largest in thecountry, doling out giant contributions to political candidates. And itslobbying muscle in Washington keeps growing.
Maybe it's time to reinstate the first principle of antitrust -- and whatbetter test case than Wal-Mart?
