In a recent letter to the House Judiciary Committee, the U.S. Department of Justice has made a concise case against the ill-named H.R. 5546 Credit Card Fair Fee Act that would let millions of merchants form a cartel to help them negotiate card fees down.

-First, passing the bill would harm consumers. If merchants force down how much they pay, it only stands to reason that the costs will just get shifted over to cardholders. In two places where interchange has been regulated (Australia and Spain), that is exactly what has happened so far.

-Second, letting the merchants form a cartel to negotiate rates is precisely why we have antitrust laws. This country has recognized for more than a century that cartels harm consumers. It is quite novel to suggest that the way to discipline market power by a group of sellers is to let all the buyers form a monopoly.

-Third, the bill would harm consumers by creating inefficient and costly price-control regulation. H.R. 5546 would impanel judges who would, in turn, regulate interchange fees if the merchant cartel and the card systems can’t agree. Price controls are, of course, perhaps one of the great failed experiments of the 20th century. Remember the gas lines in the 1970s?

The Federal Trade Commission was no kinder to the House bill. It defers to the Justice Department but notes that anyone who seeks to provide antitrust exemptions and thereby eliminate competitive forces bears a heavy burden and it notes its lack of enthusiasm for price controls.

Supporters of H.R. 5546 may dismiss these two letters issued by the U.S. Department of Justice and the Federal Trade Commission, at the request of the House Judiciary Committee, as the free-market ranting of the lame-duck Republicans. I wouldn’t count on getting any more enthusiasm from an Obama Administration. There is a broad consensus, crossing wide swaths of the ideological spectrum, that exempting businesses from the antitrust laws is a bad idea. The bi-partisan Antitrust Monopolization Commission issued a report telling Congress that such exemptions should only be granted rarely and when there was a clear case. There is also a broad consensus among economists and policymakers that price regulation simply throws sand into the economic engine that drives prosperity.

Like most industries, payment cards don’t work perfectly. That’s why there’s always opportunity for entrepreneurs to come in and offer better solutions to merchants and cardholders. That is what is happening in large measure now in the payment card industry. Let’s just let markets work and say no to cartels and price controls.