Warby Parker and Antitrust Enforcement

http://www.futureofcapitalism.com/2011/09/warby-parker-and-antitrust-enforcement

Time magazine has published an article I wrote about buying my most recent pair of eyeglasses. The point is about how competition and technology can decrease prices for consumers. I didn't really get into the antitrust enforcement angle for the Time audience, but FutureOfCapitalism readers may be more interested. From the Time article:

The Warby Parker Web site explains that the eyewear industry "is controlled by a few large companies that have kept prices artificially high, reaping huge profits from consumers who have no other options." And it's true that the Luxottica Group, an Italian company, owns Ray-Ban, Oakley, and Oliver Peoples, as well as LensCrafters, Pearle Vision, and Sunglass Hut, while also controlling the license for glasses sold under the Paul Smith, Polo Ralph Lauren, Brooks Brothers, and Prada labels.

In a situation like that, the government sometimes steps in either to break up the large company or to prevent the large company from getting any bigger, in the name of protecting consumers. Companies have to hire high-priced lawyers to get their acquisitions approved.

But the free market has a way of enforcing antitrust as well or even better than government does. Or, as one wise businessman once told me, if you want to keep a monopoly, don't charge monopoly prices. The outsized profits will just attract new entrants who can take away customers by charging lower prices. That's what Warby Parker is doing in the eyeglass industry. Rather than running to the government with a complaint to prevent the big company from charging high prices, those guys seized it as a business opportunity to undercut the big company by charging lower prices.

by Ira Stoll  |  Sep 19, 2011 at 10:41 am Related Topics:  Regulation receive the latest by email: subscribe to the free futureofcapitalism.com mailing list