Public Policy: More Power for Trustbusters

The U.S. Government is entering a period in which its antitrust powers are wider than ever, but its chief trustbuster promises to be more selective in wielding them. Antitrust enforcement has always been unpredictable at best, but until recently it concentrated its fire on such common practices as price fixing, market splitting or the domination of a nationwide market by sheer size. No longer; nowadays, antitrust frequently means antimerger. Many businessmen are confused and worried about two court decisions in the past year that have given the Government broad authority to block virtually any corporate merger that so much as threatens to lessen competition even on a local level. "The only way to avoid antitrust action nowadays," grumbles a leading Chicago lawyer, "is to have two companies so small that they don't even matter."

"We Just Forget It." The trustbusters' increased powers are in the hands of a new chief who pledges to wield them firmly but carefully. "I feel strongly that we shouldn't abuse our power," says Assistant Attorney General William Orrick Jr., 47, who took over the Justice Department's antitrust division this spring after serving in the State Department and as boss of Justice's civil rights division. Orrick followed Trustbuster Lee Loevinger, who filed a record 92 antitrust cases in 1962, irritated businessmen with his militancy and did not get along with Bobby Kennedy. He has been shifted to the Federal Communications Commission.

The small but powerful division (300 lawyers, $6,600,000 budget) that Bill Orrick took over is well aware of its expanded powers. In the Brown Shoe case, the Supreme Court last year dealt a blow to corporate lawyers who thought that antitrust action could be directed only against a large concentration of power. It ruled that a merger between Brown and the Kinney retail shoe chain had to be broken up because it might result in restraint of trade—even though it involved only 5% of the U.S. shoe business. Last June the court went further and ruled that two Philadelphia banks could not merge because they would control more than 30% of the city's banking business. To lawyers, the ruling seemed to free trustbusters from the longtime necessity of proving monopoly with voluminous economic evidence. Says Orrick: "I have no doubt that the Philadelphia decision constitutes a mandate to the antitrust agencies to scrutinize carefully the many mergers taking place today."

The Justice Department's new weapons have become powerful deterrents even when not being used. "When we see a merger possibility that we think we're going to be attacked on, we just forget it," says Executive Vice President Gene Trefethen of Kaiser Industries. Stauffer Chemical dropped its plans to buy American Viscose Corp. when the trustbusters showed interest. "It's enormously expensive to defend an antitrust charge," notes Moses Lasky, a San Francisco antitrust lawyer. "Just to have one of them brought against you is extremely serious financially."