Business: New Thrust in Antitrust

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Several panel members also faulted Kennedy-Metzenbaum for setting arbitrary limits on the size of companies that are allowed to merge. So long as inflation continues, the number of companies that have $2 billion in sales or assets will grow fast, and yet each firm will have a smaller share of the nation's markets than at present. Meanwhile, the new activism in antitrust would concentrate more and more power in the Justice Department's and FTC's enforcement bureaus. Assistant Attorney General John Shenefield, the antitrust chief, told the group that the public has concluded, though reluctantly, that Big Government is a necessary counterweight to Big Business. If businesses continue to concentrate and grow larger, warned Ohio Democratic Congressman John F. Seiberling, the public will increasingly demand that they be nationalized. His point: it is in business's own self-interest to support the bill.

Nationalization hardly seems an immediate threat to U.S. business. At a time when the U.S. is struggling to curb inflation, create jobs and sharpen its competitiveness in world markets, the purpose of antitrust policy should be to enhance efficiency. Most conference participants felt that a further tightening of antitrust policy might promote inefficiency by immunizing some big slow-moving companies from takeovers and protecting inept managers from being tossed out. Kennedy-Metzenbaum, remarked Rohatyn, "could be called the Large and Inefficient Business Protection Bill." The way to reduce conglomerate mergers, he added, is to improve economic policy. Bringing down inflation would lead to lower interest rates and higher stock prices. Companies then would no longer have the opportunity to buy out firms at fire-sale prices. Meanwhile, corporations would have more incentive to expand on their own by investing in new plants and machines. The combination of those factors, said Rohatyn, would reduce the number of mergers by 75%.

What most people at the conference agreed upon was that the debate over antitrust will continue and intensify—unsettled, and unsettling to the nation. Yet if so much is uncertain, perhaps the U.S. should be cautious about enacting new laws. In short: If you don't know, go slow.