Business: New Thrust in Antitrust

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On the other side, speakers argued that the Government's concern ought not to be bigness per se, but whether corporate giants are efficient and whether competition flourishes in their industries. U.C.L.A. Economist Harold Demsetz said that despite the rise of conglomerates, there has not been much change in market concentration in 70 years, "and those increases in concentration that have occurred have been associated with lower prices and increases in efficiency." Yale Economist Paul MacAvoy reported that his own research shows that conglomerate mergers do not produce more concentration in specific markets but do tend to produce gains in efficiency.

Disagreeing with Demsetz and MacAvoy, Economist Willard Mueller of the University of Wisconsin claimed that corporations have indeed increased their size and power because "the percentage of all U.S. manufacturing assets held by the nation's 200 largest industrial corporations has risen from about 48% in 1950 to over 60% today." In fact, big companies have not increased their shares of individual markets but, as conglomerates, have grown larger and larger in the economy as a whole. In the past two decades, multinational companies have also grown, and the growth of their overseas activities has helped to make Big Business seem bigger than ever.

Mueller, like Pertschuk, was also concerned because the impact of big mergers is difficult to measure and may not become clear until after competition has been badly damaged. As companies expand by merger, their muscle may scare off smaller competitors. In the words of Walter Adams, the conglomerate giants have the resources to support money-losing operations for long periods; they can simply "outbid, outspend and outlose" small rivals, creating a kind of economic Darwinism.

But there is simply no hard evidence to support this concern. New York Attorney Ira Millstein, co-founder of the Columbia University Center for Law and Economic Studies, observed: "There are feelings about large mergers, there are emotions about large mergers. There is a suspicion about size and its relationship to the power and politics of society. But there is an almost total lack of responsible research in the area."

To most participants, the real question was: If no one can prove that bigness is bad, then why ban it? To Irving Shapiro, chairman of E.I. du Pont de Nemours, the concept amounted to "no fault antitrust." In other words, it penalized companies simply for being more successful than their competitors.