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172 IRET Congressional Advisory 1 (2004)

handle is hein.taxfoundation/iretcgadv0169 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote growth and efficient operation of the market economy. April 21, 2004 Advisory No. 172 POSTAL SERVICE'S IMMUNITY FROM ANTITRUST LAWS SHOULD BE RESTRICTED Executive Summary The Supreme Court ruled unanimously this year that the U.S. Postal Service cannot be sued for alleged violations of the antitrust laws (U.S. Postal Service v. Flamingo Industries). The Postal Service's antitrust immunity is sweeping. It is not confined to the agency's core market, which is sheltered from competition by Congressionally authorized dual monopolies on non-urgent letter delivery and mailbox access, but applies also to the billions of dollars of business the Postal Service does in other markets, where it faces direct competition from private-sector businesses. The Supreme Court did not pass any judgement on the Postal Service's conduct, on how the Service's conduct affects others in the economy, or on the costs and benefits of the antitrust laws. The Court based its decision on sovereign immunity. According to the Court, the Postal Service's character as a federal government entity provides it absolute immunity from the antitrust laws, unless Congress explicitly waives its government-based exemption from the antitrust laws. Incentives within government agencies favor expansion, and anticompetitive behavior may be used to support expansion efforts. A particular concern with regard to the Postal Service is that it will attempt to further its expansion ambitions in competitive markets by exploiting the power it derives from its huge monopoly market and from its governmental privileges. If the Postal Service behaves anticompetitively, its conduct could harm customers within the postal monopoly, taxpayers, the owners and employees of private-sector businesses, government finances, and economic productivity. Wise public policy calls for reining in the Postal Service's antitrust-law exemption. Congress should pass legislation explicitly removing the Service's antitrust immunity, except on the agency's core activities as delineated by its dual monopolies. ens. AI~ 6 I II. I A~ ~