Business: New Thrust in Antitrust

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More significantly, a new bill, sponsored by Senator Kennedy and Ohio Democratic Senator Howard Metzenbaum, goes much further and asserts that the mere size of a corporation can tend to give it undue power over countless markets. In short, bigness is badness.

Kennedy-Metzenbaum would categorically block takeovers or mergers between companies that have either assets or annual sales of more than $2 billion, a group that includes some 150 of the top U.S. industrial firms. The bill would also stop takeovers by these firms of the hundreds of additional companies around the country that have $350 million or more in assets or sales.

The mergers and takeovers would be prevented unless management could prove that joining together would improve competition or operating efficiency. That is something that businessmen say would be exceedingly difficult to show since the hoped-for benefits might not be expected to occur for years. If such proof were not possible, the deal could still go through if the acquiring company agreed to spin off a subsidiary, division or some other large asset so that the parent firm would be no larger than it was before the linkup. The bill is strongly opposed by the business community and is unlikely to be reported out of committee this year.

Still, Robert Bork, now a Yale law professor, contended that Kennedy-Metzenbaum is symptomatic of a new anti-bigness mentality in the highest reaches of Government. Though most conference participants felt that large companies compete as ferociously and fairly as small firms, they were told by Economist Walter Adams of Michigan State University that antitrust has political as well as economic elements. Said he: "The objective of antitrust is not to promote efficiency and consumer welfare. These are only ancillary benefits that are expected to flow from economic freedom. The primary purpose of antitrust is to perpetuate and preserve, in spite of possible cost, a system of governance for a competitive free-enterprise system."

Thus the panelists often found themselves debating a basic political and philosophical issue: Do the economic benefits of large size and efficiency outweigh the political risks of allowing power to be gathered in relatively few hands?

The issue has intensified because of the rise of conglomerate mergers between companies in completely unrelated fields. In defending his bill, Senator Kennedy points out that such linkups accounted for only 38% of all mergers in 1950 but have risen to nearly 90% since then. He calculates that the amounts paid to acquire firms in these deals jumped from $12 billion in 1975 to $34 billion last year.

Like a latter-day Jeffersonian, Federal Trade Chairman Michael Pertschuk argued that large conglomerates should be banned because "they increase their power at the expense of smaller and less organized groups, and of the individual." In Pertschuk's view, the danger is all the greater because of the difficulty in measuring the consequences of the steady concentration of power.