New York Times Unwittingly Uncovers Anti-Trust Conspiracy
Senior Editor, CNBC.com
Saturday's New York Times had an almost perfect piece of weekend business journalism detailing the practice of a family run knife-sharpener business.
There aren't many of these fellows left, the NYT's Robin Shulman says there are just 100 knife sharpeners in North America, so this is a rare look inside an otherwise closed society and business.
And what do we find? The knife-sharpeners largely come from the same area of Northern Italy. They still sharpen knives much the way their fathers and grandfathers did, although technology has sped up the practice. Even more importantly, restaurants now have duplicate sets of knives, which allows the sharpening to take place off site in a shop. Formerly, the sharpening was done curbside, in a truck.
We also discover that the knife-sharpeners are participants in what sounds like an illegal anti-competitive conspiracy. Here's the damning evidence:
Some of the northern Italian knife sharpeners still function in the old style, as members of the New York Grinders Association. The rules used to be simple: Don’t mess with someone’s turf. Stick to your own route — the one you inherited from your father or grandfather. Avoid the vendettas that have overtaken sharpeners in other cities.
“People will trade stops,” said Rinaldo Beltrami, the association’s president. Mr. Ambrosi, who let his membership in the association lapse, said, “I was brought up in that way of thinking.”
Yet he will still sometimes appease a competitor by saying, “Let’s sit down, we’ll have a meeting, we’ll make a borderline — I won’t bother you.”
If you do not immediately spot an anti-trust violation in those words, here's a mental exercise. Imagine if UBS wealth management head Bob McCann sat down with Bank of America Merrill Lynch wealth management head Sallie Krawcheck to agree to "make a borderline," with each promising never to encroach on each other's geographic territory. Or imagine if Hertz and Avis agreed never to operate out of the same airports in order to "avoid the vendettas."