This week Alan Reynolds wrote about the “European antitrust extortion,” arguing that “the European Union is a relative novice in using threats of antitrust enforcement to collect cash and dispense favors. But inexperience is no excuse for running amok.” Reynolds is right on.

The EU antitrust enforcement “must be great fun for power-mad bureaucrats, and quite lucrative,” writes Reynolds. “The EU blocked a U.S.-approved merger between Boeing and McDonnell Douglas to the advantage of their European rival, Airbus. The EU blocked potentially useful mergers between GE and Honeywell, and between Sprint and MCI, to protect favored competitors – not competition.”

Basically antitrust regulation is based on a misconception of how the market operates. Yesterday’s monopolies are gone today. The market is not a static place, and the most efficient way to combat monopolies is through deregulating the economy, making it easier to introduce alternatives.

The only companies that have the benefits associated with antitrust regulations are those that have government sanctioned protection against competition, whether this be a government monopoly or a government enforced cartel.

The focus of Europe’s antitrust policies is definitely wrong. They are based on the principle of protecting competitors and not European consumers. In the US, antitrust regulation is made under the pretext of securing competition and helping consumers, not helping inefficient competitors.

Citing McChesney of Northwestern University, Reynolds points out that “EU antitrust enforcement includes a permanent bureaucracy, largely unreachable by individual national authority, applying and enforcing its own dictates.”

Being a bureaucrat with those powers must be rather fun, and potentially rather healthy for your own purse – if you don’t mind the occasional bribe or two. (I am not saying that all, or even any, bureaucrats are corrupt – just pointing out that the system is susceptible to abuse).

The EU has during the past few years issued more than its fair share of antitrust rulings. Recently it threatened to levy fines of as much as $2.4 million a day on Microsoft, on top of the March 2004 fine of $620 million.

Reynolds has a point when he argues that “this is starting to look like a discriminatory, extraterritorial tax. Imagine if the shoe were on the other foot. Suppose the United States concocted some antitrust complaint with a European firm like Airbus and claimed the authority to extract hundreds of millions of dollars in tribute. Would Europeans put up with that?”

I doubt it. When the EU first ruled against Microsoft, Karin Riis-Jørgensen, a Danish Member of the European Parliament, argued that this case clearly illustrated that the EU was capable of putting itself above national interests and simply following the rules. Since the national interests she was referring to are not European, one wonders if that argument truly holds.

The various cases against Microsoft illustrate the meaninglessness of the anti-trust legislation, since there cannot be a monopoly where there are alternatives. If you do not like Microsoft Internet Explorer, there is Firefox, Netscape or Opera.

“In comparing costs and benefits of U.S. antitrust enforcement, I see only enormous costs and no benefits,” writes Reynolds, adding: “The only thing more stupid and wasteful than U.S. antitrust is European antitrust. What European bureaucrats do to hobble or pillage any European businesses is none of our business. What they do to pillage or hobble American businesses, on the other hand, is very literally our business. And our money.”

As for us, Europeans, what European bureaucrats do to hobble or pillage any European businesses is our business. And our money.