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PrintFebruary 14, 2011
The UAW and Price Fxing
Imagine an owner of a company pressuring a competitor to raise prices. If successful, that owner could increase his profits by charging the consumer more. This would be per se illegal manipulation of the marketplace.
This situation is exactly what will happen if, as threatened, the United Auto Workers (UAW) organizes one of the foreign car makers in the U.S. The UAW, owner of 65% of Chrysler and 17.5% of General Motors, would then be able to negotiate with, for instance, Toyota or Honda to raise salaries and impose costly work rules. Toyota or Honda would then have to raise the sale prices of cars to earn more to cover increased expenses. In turn, UAW then could be able to increase the prices of cars to earn greater return on their assets. This is anticompetitive.
The Federal Trade Commission (FTC) has a mandate to ensure fair competition among companies in the US marketplace. The FTC often acts preemptively to prevent agreements that interfere with competition. Even though this situation is novel and not specified in the "Antitrust Guidelines for Collaborations Among Competitors", it is clearly not in the interest of a healthy marketplace.
The FTC should inform the UAW that it may not try to unionize the manufacturing plants of foreign auto makers.
For the same reason, the FTC should require that an entity other than the UAW represent auto workers at Ford. For the UAW to receive the gift of Chrysler and General Motors, this would be a small price to pay.
Peter Landesman (mathmaze@yahoo.com) is a teacher, a mathematician and an author of the 3D-maze book Spacemazes, with which children can have fun while learning mathematics.
