A Smith & Wesson FAQ

A gun deal with many losers.

Walter Olson from the June 2000 issue

(Page 2 of 3)

Q: Wouldn't it be easier for a dealer to drop the S&W line?

A: The Clinton administration was counting on S&W's status as the number one gun maker. Having absorbed that variety of antitrust analysis that describes a manufacturer as "controlling" a certain market share, the president's men thought helpless buyers would have no place to go. They figured they could leverage S&W's market share through what amounts to a tying arrangement: If dealers and gun shows wanted to stock the dominant manufacturer's line, they'd have to agree to stop promoting disfavored, competitive product lines.

Q: Wait a minute. Isn't that kind of like what Microsoft did to Netscape?

A: Yep. Tying arrangements aimed at excluding competitive products from the market are bad, bad, bad when dominant companies attempt them on their own. But very similar arrangements are to be applauded when companies do them in collusion with state attorneys general and cabinet secretaries.

Q: How did the tying arrangement work?

A: It was an instant flop. Rather than allow someone else's legal needs to dictate their business practices and inventory, many dealers resolved to drop the S&W product line. Instead of the race to settle that the gun suit organizers expected, they got a race to break ties with the (former) market leader. Aside from the dealers who jumped ship, some organizers of shooting matches have told S&W that it is no longer welcome, and other gun companies stopped coordinating their legal defense efforts with S&W, which meant it had to find a new law firm.

Q: What happened then? Did the anti-gun side admit it had miscalculated?

A: You're not going to believe this part. Several of the most combative state attorneys general, including Connecticut's Richard Blumenthal and New York's Eliot Spitzer, announced that they were going to sue the gun industry for not cooperating with S&W. On antitrust grounds, no less. This may be the first antitrust action in history aimed at smaller companies that refused to enter into tying arrangements with the dominant manufacturer in their market. It's a purely political move, meant to punish the still-free portions of the gun industry for their determination to remain free.

In addition to the business reasons for dropping S&W products, there was a huge amount of anger at the company within the industry for its perceived betrayal. The droves of consumers who were vowing never to buy another gun from "Clinton & Wesson" probably also encouraged dealers to dissociate themselves from the company.

Q: That seems kind of hard on poor old S&W, doesn't it? It was just trying to save its skin, not endorse gun control in principle.

A: In practice, the deal--which specifies that it can be enforced against S&W both as a contract and as a court settlement--does seem to align the company, against its will or not, with hard-line anti-gun sentiment. For example, S&W agrees to work "to support legislative efforts to reduce firearm misuse." It's not hard to guess what the signatories on the other side intend by such language, and it's sobering to think that in the future S&W might be held in violation of a court order (and also in breach of a contract) should it honestly and publicly say that some anti-gun legislative scheme is a bad idea. There are also widespread suspicions that "educational" aspects of the settlement, such as the establishment of a manufacturer-funded "education trust fund" and the provision of mandatory training and safety leaflets for customers, will become channels for the dissemination of anti-gun propaganda, paid for at one remove by buyers of S&W guns.

These suspicions are intensified by the pact's establishment of an Oversight Commission with which S&W "pledges to cooperate fully" and which will be empowered to oversee the agreement's implementation. The five members of the commission will be selected as follows: one by gun makers; one by the federal Bureau of Alcohol, Tobacco, and Firearms; two by city and county parties; and one by state parties. This commission will thus start out with a 4-to-1 majority favoring gun control, which will at best shift to a 3-to-2 majority in favor of gun control even if a libertarian president and Congress get elected tomorrow and name P.J. O'Rourke as the new head of the BATF.

The Oversight Commission's three-member working majority will not be selected by, or reflect the views of, a cross-section of American voters, but only those of the lawsuit "parties," which consist of various big cities and a few liberal states. Remarkably, cities such as Miami and Bridgeport, whose suits have already been thrown out as meritless by state judges, do get important voices in the new ruling junta that will enforce rules for gun buying nationwide. Yet the rest of the country is consigned to, at best, a permanently outvoted minority role.

Q: It sounds as if you're about to go off on an "end run around democracy" tear again.

A: It shouldn't be left to libertarians to voice qualms about the way major lawmaking proposals that had been brought up and specifically rejected in Congress and many state legislatures can be rammed through by force of litigation. But it seems most commentators' reaction to the agreement simply hinged on whether they liked its substantive content or not; if you're for gun control, it seems, you're for it no matter how it is achieved.