07-15-2000

ECONOMY: Merger Mania

Washington's antitrust watchdogs are besieged. As a tidal wave of
mega-mergers reshapes the country's corporate landscape, the government
lawyers and economists charged with examining these deals are in danger of
being overwhelmed.


This problem is largely overlooked by the media, which


instead focus on high-profile cases involving charges of monopolistic
behavior, such as the government's battle against Microsoft Corp. But the
implications of the


trustbusters' difficulty in staying on top of the other part of their
job-scrutinizing mergers-are serious. After all, the government watchdogs
are the primary line of defense against mergers that enable companies to
crush competition and to harm consumers.


"The two federal enforcement agencies [the Federal Trade Commission
and the Justice Department] are stretched to capacity and beyond,"
said William E. Kovacic, who specializes in antitrust law at George
Washington University Law School. "The quality of the team that both
agencies are able to assemble for some [merger] transactions is relatively
weak, so that some matters are not getting the level of scrutiny that
others do."


And, Kovacic noted, top federal officials compensate for their tight
budgets by channeling resources "toward the highest-visibility
transactions-the ones that could damage your reputation the most if you
were seen to drop the ball-but that means that there are a host of other
matters of less-obvious significance that tend to get much less
attention.... You can have competitive problems there."


Not just academics are worried. Robert Pitofsky, the FTC chairman and one
of the country's foremost experts in antitrust law, sees potentially
ominous implications. In an interview, Pitofsky, who previously served two
tours at the FTC and many years as a professor and dean of Georgetown
University Law Center, said consumers should be "apprehensive"
about whether the government has the arsenal to deal with the ever-growing
number of mergers. But he added that his agency, thus far, has been
"successful in keeping an eye on this merger wave and ... when we've
gone to court, we've tended to win."


"We are handling three or four times as many mergers today as in
1993, with roughly the same staff," Pitofsky noted. "We have
gone from $22 billion in 1993 to $2 trillion in assets gobbled up by
mergers-and that is not all inflation.... There is some concern about
whether we can do it."


Joel I. Klein, the head of the Justice Department's Antitrust Division, is
just as adamant. "We need more resources," Klein declared in an
interview. "I really think that is important."


That such concerns are being voiced now is especially worrisome, given the
country's astonishing number of mergers. Remarkably, the 20 largest deals
of all time that involve U.S. companies have all been initiated in the
past three years, according to Thomson Financial Securities Data. (See
table, p. 2284.) These corporate marriages have been spurred, in part, by
the highly competitive global marketplace and by the deregulation of the
telecommunications and energy industries.


Top company executives routinely decide that their firms must be big in
order to compete in a global economy. Nearly every week, another stunning
merger announcement is made, such as the recent proposal to combine United
Airlines and US Airways to create a behemoth carrier almost twice the size
of its next-largest competitor. In January, the mother of all
mega-mergers, the $182 billion marriage of America Online Inc. and Time
Warner, made a huge splash as the biggest deal ever. No sector of the
economy is immune from this whirlwind of corporate marriages, from
agriculture to health care to airlines to telecommunications. (See
accompanying stories on the economic factors behind the merger boom, p.
2290, and on how Washington is responding to merger activity in four key
sectors, pp. 2294-2301.)


For government watchdogs, the percentage of merger deals that requires
investigations-and, perhaps, subsequent challenges-is still quite small.
But because the sheer number of these deals has grown astronomically, the
burden on the agencies has increased commensurately.


For example, the number of merger proposals more than tripled between 1991
and 1999-from 1,529 applications to 4,642-but the number of FTC staffers
rose very modestly, from 313 to 347. The Antitrust Division's resources
have been similarly constrained. It currently has just 342 attorneys,
including those in its field offices, who must also work on criminal
enforcement and other nonmerger issues. More than a few private law firms,
which are desperate for help on merger cases, have lured away beleaguered
FTC and Justice Department lawyers with promises of fatter paychecks. (See
related story on the surge of business for the antitrust bar, p.
2286.)


Both agencies review mergers under the standards of the 1914 Clayton Act,
which prohibits combinations that may substantially lessen competition.
They divvy up the workload by referring cases to the office that has the
most experience in a particular market. For example, the Antitrust
Division handles airline and telephone mergers, while the FTC reviews
pharmaceutical and oil companies' deals. In dealing with a
"convergence" merger that crosses industry lines in which both
offices have expertise, the case is assigned after discussions between the
FTC chairman and the Antitrust Division chief.


As questions are raised about whether the government has the wherewithal
to stay on top of these proliferating proposals, experts differ sharply
about how well the watchdogs have used the resources that they do have.
The trustbusters, for their part, know that no matter how they respond,
they will be subject to plenty of second-guessing.


Bring together a group of antitrust practitioners, consumer advocates, and
lawmakers to critique the Clinton Administration's performance in
reviewing mergers, and you will hear sharply divergent views. Pitofsky and
Klein have either pursued a sober, moderate course that is warranted in a
global economy in which companies must bulk up to stay competitive-or they
have been asleep at the wheel and allowed mergers that have resulted in
too much consolidation and have saddled consumers with higher prices and
fewer choices.


"We're damned if we do and damned if we don't," Klein said with
a chuckle during an interview last year, before a court ruling was handed
down in the Microsoft case. Since then, of course, the chorus of both
plaudits and potshots aimed at the government's antitrust enforcement
program has grown even louder.


Seeking the Middle


The amiable, 70-year-old Pitofsky knew where he wanted to steer the FTC's
merger enforcement efforts when he assumed the chairmanship five years
ago. He was determined to strike "a middle ground" between the
Reagan Administration, which Pitofsky argued "underdid it" with
a "minimal enforcement" program that was too permissive in
allowing mergers, and the Supreme Court of the 1960s under Chief Justice
Earl Warren, which "overdid it."


Pitofsky's pragmatic course has resulted in the government giving the
green light to certain mergers that would have been unthinkable 20 or 30
years ago. The FTC's merger enforcement actions, as well as the Justice
Department's approach, have demonstrated that the antitrust maxim of the
1960s and 1970s that "big is bad" has been jettisoned.


No longer is the size of a transaction, in and of itself, enough to prompt
a governmental challenge. This became clear in 1999, when Pitofsky's FTC
approved the marriage of Exxon Corp. and Mobil Corp.-the largest
industrial merger in history. The commission found that the combination of
the two huge petroleum firms would significantly injure competition in a
number of markets. But instead of opposing the merger, the FTC sought to
cure the problem by insisting on the largest divestiture in history,
including a requirement that the merging companies sever relationships
with 2,431 gas stations that they owned.


"If you had proposed 20 years ago a merger between Exxon and Mobil,
you would have been thought to be a lunatic because the industry was
regarded with such tremendous suspicion," Kovacic said. "They
were the national economic bad guys. And it would have been seen as a
hopelessly ill-conceived move-dead on arrival."


David H. Evans, an antitrust lawyer with Jones, Day, Reavis, & Pogue
in Washington, agreed, noting that in the past, the firms' "sheer
size and girth" would have provoked a challenge. Today, because the
marketplace is global and not confined to national borders, the
trustbusters take a markedly different view, he said.


Even as the Exxon-Mobil case shows how the philosophy of antitrust
enforcement has changed over the years, another important case, involving
the office supply company Staples, showed that the watchdogs still have
plenty of bite.


Staples proposed a $4 billion deal to acquire Office Depot, but the FTC
charged that if the merger were consummated, the combined firm would
control prices for the sale of office supplies in numerous metropolitan
areas. Staples abandoned its plans in 1997, after the government won an
injunction.


Many antitrust lawyers were skeptical that the FTC could prevail in the
Staples case, said Evans. The commission's victory "led to a
renaissance of merger review," he added.


William Baer, director of the FTC's Bureau of Competition from 1995-99,
echoed that sentiment. "The successful challenge put the business
community on notice that the antitrust enforcers were willing to go to
court and able to present a case sufficient to block mergers that posed
anti-competitive risks," Baer said.


The Exxon-Mobil case and the Staples-Office Depot case typify the
"middle ground"at Pitofsky identified as his goal and, perhaps,
explain why a sampling of opinion among antitrust lawyers reveals a
generally favorable view of the Clinton Administration's approach to
mergers. "They are much more focused and more precise in their
analysis," Evans said. "They want to see if a merger is truly
anti-competitive.... They are not throwing stuff up in the air and seeing
what sticks."


Likewise, James F. Rill, who headed the Justice Department's Antitrust
Division in the Bush Administration, says that the work of Pitofsky and
Klein is "in the mainstream" and "generally on the right
track."


Comments such as these from antitrust attorneys indicate that the
corporate community-at-large believes Clinton Administration trustbusters
are practicing moderation. After all, company executives tend to be
reticent about publicly commenting on federal regulators, and instead rely
on their lawyers to make their pitch.


Still, there are pockets of sentiment that the Administration has been
overly aggressive. On July 11, Bernard J. Ebbers, the chief executive of
WorldCom, angrily lashed out at regulators for challenging his company's
proposed $115 billion acquisition of Sprint Corp. According to the
Associated Press, Ebbers complained that regulators have approved many
mergers involving the Baby Bell telephone companies-the local monopolies
created by the breakup of AT&T Corp. in 1984-while suing to block the
combination of two former challengers to Ma Bell. "The legacy of
[Attorney General] Janet Reno, Joel Klein, and [Federal Communications
Commission Chairman] Bill Kennard will be the remonopolization of local
service for consumers," Ebbers said.


Some antitrust attorneys aren't too happy, either. Joe Sims of the Jones,
Day firm contends that Reagan-era regulators would rarely try to stretch
the law to challenge a marginal case. He complains that Clinton
Administration litigators have been more willing to push the envelope as a
result of their belief that "they can improve the
world."


But the most withering criticisms come from antitrust specialists in the
consumer-activist community, some of whom condemn the Clinton
Administration for sleepwalking through the merger boom and passively
approving deals that should have set off alarms. By allowing so many
mega-mergers in industries such as petroleum and telecommunications, the
government has put a few Goliath companies in dominant positions and has
made consumers the losers, these critics contend.


"These guys are doing the bare minimum in terms of mergers to still
draw a salary," charged James Love, director of the Ralph
Nader-backed Consumer Project on Technology. "When you permit
Exxon-Mobil and a bunch [of other mergers in the oil industry] like that,
don't be shocked when you observe the industry is ... a little better at
maintaining a cartel."


Pitofsky countered that a dozen U.S. oil companies remain "effective
competitors." Moreover, he said, the oil industry can make a
legitimate case that as companies get bigger, consumers benefit because
the firms are more efficient.


Maybe so, but Love's charges come just as the FTC has launched an
investigation into skyrocketing gasoline prices, which have hit the
Midwest especially hard. Although the FTC has approved mergers that
resulted in behemoths like Exxon Mobil Corp. and BP Amoco-Arco, Pitofsky
contended in June 28 testimony before the House Commerce Committee that
"it does not appear, at the outset, that any single company has
sufficient market power to raise prices unilaterally." Still, the FTC
is probing whether the industry was involved in collusion or other
unlawful anticompetitive conduct.


Another consumer advocate, Gene Kimmelman, co-director of the Washington
office of Consumers Union, has been just as scathing as Love. Kimmelman
has blistered what he sees as the Justice Department's
"risk-averse" approach to telecommunications mergers. He
contends that the department's passivity has resulted in less competition
than was expected when sweeping legislation deregulating the
telecommunications industry passed in 1996.


Even after the Justice Department filed a major lawsuit in June to block
WorldCom's proposed acquisition of Sprint-by far the largest deal Justice
has ever tried to stop-it drew a further rebuke from Kimmelman. He argued
that the second- and third-largest long-distance companies would never
have considered the audacious merger had the department been tougher in
its enforcement program in recent years. "The department sent the
wrong signal to the marketplace, which fostered an anything-goes
attitude," said Kimmelman.


Rather than giving the department credit for a bold strike, Kimmelman
suggested that even the most acquiescent antitrust authorities would have
had to recognize that they must draw a line in the sand to stop the
merger. "It is a garden-variety antitrust case, a straight
nuts-and-bolts case, that would concentrate the long-distance industry by
reducing it from three [big competitors] to two," he said.


But the notion that the watchdogs are too passive is hotly rejected by
Philip Verveer, who has done tours of duty at the Justice Department's
Antitrust Division, the FTC, and the Federal Communications Commission. In
telecommunications alone, Verveer said, the explosion in mergers has
forced the government antitrust team to plunge into unchartered
territory.


"The reality that they face is that they are caught up in something
that none of them have ever seen before-


they just have never seen it," said Verveer, who represents Sprint
and is a partner in Washington's Willkie Farr & Gallagher. "The
ground is shifting under their feet so fast that keeping their balance is
damn near impossible."


Drawing Lines


On June 27, when the no-nonsense Klein held a news conference to trumpet
the Justice Department's lawsuit against the WorldCom deal, he made clear
that regulators weren't trying to send any big message-contrary to
speculation that the case was designed to discourage future
telecommunications mergers. "We take these cases one at a time,"
Klein emphasized.


To some critics, Klein's statement was discouraging. Sure, any government
challenge to a deal must only come after the facts of that particular case
are mastered and the market involved is thoroughly studied. After all,
bringing an antitrust case under the 1914 Clayton Act is a heavy burden:
The Justice Department must demonstrate that a merger would
"substantially" diminish competition or tend to create a
monopoly.


But when regulators look solely at each case, one at a time, it seems that
they leave out any examination of whether a merger is likely to trigger
other mergers by executives of competing companies who will feel compelled
to keep up. Where is the watchdog to draw the line after the first major
merger that leads to a series of subsequent mergers?


"You still have to make the case on each individual merger,"
said Baer, who is now a partner in the law firm Arnold & Porter.
"But where it looks like the potential first in a string of dominoes
to fall, there is a fairly heightened sense of scrutiny to make sure that
if the dominoes start falling, we will not regret the final
outcome."


Critics like Kimmelman already have many regrets about the state of
competition in the telecommunications industry. He argues that once Klein
gave unconditional approval in 1997 to the merger of Bell Atlantic Corp.
and NYNEX Corp.-two of the seven Baby Bells-he set the stage for massive
consolidation in that market.


Today, as a result of mergers among the original seven Baby Bells, only
four huge companies are left. Two of those, Bell Atlantic Corp. and SBC
Communications, control 69 percent of the nation's local-exchange access
lines.


"In an area where Congress has just recently passed a deregulatory
law and said that it wanted more competition, an area that is viewed as
one of the key areas of the new economy, there was a lot of reason to be
more aggressive," Kimmelman said. He charged that Klein signaled to
the market that these mergers would be allowed, and added, "His lack
of knowledge and awareness of market trends led to an opening of the
floodgates."


Klein, along with other antitrust specialists, dismisses that analysis.
"I spent a lot of time on Bell Atlantic/NYNEX, but I look at not just
the mix of assets and scope and scale issues, but at its competitive
impact," he said in an interview. "I believe then and I believe
now this view has been clearly vindicated, that the size of Bell
Atlantic/NYNEX is not what's driving this market right now."


Klein is not about to be cowed by critics' potshots. The 53-year-old magna
cum laude graduate of Harvard Law School-who served as law clerk to
Supreme Court Justice Lewis F. Powell Jr. and as a litigator for more than
20 years before assuming his current post-is upbeat about the prospects
for a competitive telecommunications market.


Still, this notion of cascading mergers is not some abstract problem. It
has implications for other pending mega-deals. For example, in May, when
the United Airlines-US Airways merger was proposed, a flurry of
discussions reportedly took place among executives of other major carriers
about merging. Speculation arose that AMR Corp., the parent of American
Airlines, and Delta Air Lines, would combine. Reportedly, AMR executives
have also made an offer to acquire Northwest Airlines.


Sen. Mike DeWine, R-Ohio, the chairman of the Judiciary Antitrust,
Business Rights, and Competition Subcommittee, made clear at a June 14
hearing on airline mergers that he was concerned that "the other
airlines will almost be forced to react, and the most logical reaction
will be more mergers." The resulting consolidation, he concluded,
"could leave the industry with as few as three major airlines,
decreasing competition, and increasing ... prices for
consumers."


But some antitrust experts believe that it may not be so simple for
government regulators to become more sensitive to the implications of
"triggering mergers" in the marketplace. "It puts a real
premium on the ability of the enforcement agencies to look over the
horizon and ask `what's next, what happens when the next one comes in the
door,' " Kovacic said.


Added Pitofsky: "It is the toughest call antitrust enforcement people
are required to make. What do you do about the first in a series of
mergers when you recognize that if one goes through, others will be
thinking about mergers as well?"


Other practitioners have noted that the fast-moving telecommunications
field may be the most difficult sector in which to judge how competition
will be affected by the approval of a specific merger. For example, in
evaluating a merger between two Baby Bells, the decision-maker must make
assumptions about the possibility that new players might compete in the
local telephone market.


But Kimmelman continues to insist that Klein "missed the boat,"
starting with his approval of the Bell Atlantic/NYNEX merger. "They
have not done very much," he said of the Justice antitrust team.
"They can argue [lack of] resources, they can also argue a very
conservative bench. But there is still a question: When do you just do the
right thing? When do you force the issues and when do you force the courts
to look at new issues especially in important markets."


Still, even Kimmelman acknowledges that by pressing such bold antitrust
theories in courts, there is a likelihood, especially given the generally
conservative makeup of the bench that he referred to, that the government
would lose. Then, the very outcome that distresses Kimmelman the most
might happen: Companies might be emboldened to pursue even more audacious
acquisitions.


When pressed on that point, Kimmelman is unbowed. "It's tough to make
these cases, but I don't agree with the kind of intellectual arrogance
that winning is everything in antitrust," he said. "When do you
take some chances to make antitrust really meaningful in the 21st
century?"


Much Talk, Little Action


What about Congress's role in merger mania? At bottom, lawmakers resemble
barking bird dogs with more woof than bite. House members and Senators
howl ferociously to protect their home turfs, especially when they believe
that mergers or acquisitions could harm their constituents, from farmers
to businessmen to air passengers. But Congress is actually doing little to
toughen the antitrust laws or bolster the budgets of Justice's Antitrust
Division or the FTC.


To be sure, the congressional rhetoric-"collusion,"
"monopolistic practices," "price gouging"-has been
heated and bipartisan, whether the issue at hand is soaring gasoline and
drug prices or airline and communications mergers. The more sedate critics
are simply "concerned."


For example, shrinking competition in agriculture has led Sen. Charles
Grassley, R-Iowa, to propose legislation that would give the Agriculture
Department an equal role with the Justice Department in reviewing mergers,
so as to guard against unfair competitive practices in that sector of the
economy. "The institution of the family farm should be valued in the
review process, just as the interests of consumers are considered by the
government," said Grassley, a lifelong farmer.


In April, when the FTC approved the merger of BP Amoco and Atlantic
Richfield Co., Sen. Barbara Boxer, D-Calif., responded with guns blazing.
Boxer charged that the commission "failed to stand up for consumers
in California and throughout the West Coast." She concluded that the
merger "will strengthen big companies' chokehold over California's
gasoline market and make an already intolerable situation even
worse."


But even though lawmakers shout, they haven't written many laws aimed at
the merger phenomenon. In fact, one of the few pending bills would update
the so-called Hart-Scott-Rodino law of 1976 to reduce scrutiny of some
mergers. Under the legislation, approved by the Senate Judiciary
Committee, many relatively small business mergers would be exempted from
antitrust reviews by the Justice Department and the FTC.


Currently, large companies seeking to merge pay a $45,000 pre-merger fee
to the government, which helps fund the regulators' reviews of proposed
deals. This payment generally involves companies with annual sales or
assets of $100 million or more that want to acquire a firm with net assets
or stock of more than $15 million. The pending Senate bill would raise the
$15 million minimum to $50 million, and set a higher, sliding scale of
fees-from $45,000 to $200,000-depending on the size of the transactions,
for the acquiring company.


Roughly one-third of the 5,000 merger and acquisition transactions
reported to the government in 1999 would have been exempt from regulatory
scrutiny under the bill, which has the support of the FTC and Justice's
Antitrust Division. Similar legislation is pending in the House.


Meanwhile, the House Commerce Telecommunications, Trade, and Consumer
Protection Subcommittee approved legislation in June aimed at forcing the
FCC to speed up its review of telecommunications mergers. Republican and
Democratic lawmakers, encouraged by lobbyists representing firms with
pending merger deals, have ratcheted up their rhetoric denouncing the
commission's work.


The chorus of criticism from Congress is as much a part of the process as
writing laws, some lawmakers say. "Our job is not to just write
legislation," said DeWine in an interview. "Our role is almost
unique. It is to provide a public forum and call in all sides."
DeWine said of his recent hearing on the proposed United Airlines-US
Airways merger: "Our role is to bring a little sunshine to the
process. The public thinks all this is done behind closed doors and it is
a closed process."


Justice's Klein has said he sees no need for Congress to revise the
antitrust laws. "I think Congress obviously has a legitimate
oversight role," Klein told National Journal. "My own
view-although Congress is free to have a different view-my own view is the
antitrust laws don't need changing, because in part, unlike many of our
laws, they are common-law laws."


Yet, in recent testimony before the House Judiciary Committee, Klein
supported a member's suggestion that the Justice Department should have
full enforcement power over railroad mergers, which are now under the
jurisdiction of the federal Surface Transportation Board.


"I don't think the current structure is satisfactory," Klein
said. "I do think there should be an opportunity for the Justice
Department to have full enforcement authority with respect to rail
mergers." He added that his agency should be able to block a merger
or challenge anticompetitive behavior, and he voiced "hope that the
Congress sees fit to give us that enforcement authority."


But Linda Morgan, chairwoman of the Surface Transportation Board,
questions the need for a change. "What is wrong with what we do
today?" she asked in an interview. "You don't make changes in
regulatory processes just to make changes."


Albert A. Foer, a former FTC lawyer who founded the nonprofit American
Antitrust Institute two years ago, believes that Congress's most important
job is acting as paymaster to the trustbusters. In a study last fall, Foer
and Robert H. Lande, a University of Baltimore law professor, gave support
to the pleas of Pitofsky and Klein that their budgets should receive a
sizable boost.


According to the study, the budgets of the Antitrust Division and the FTC
have had their ups and downs in recent history, but hit a low point during
the Reagan Administration, when there were "very dramatic
cutbacks." The study concluded that "a steady recovery began in
1990, but staffing levels have not yet caught up with where they were in
1980." Foer links the size of the agencies' budgets to their degree
of aggressiveness in antitrust policy.


President Clinton, Foer calculated, has asked for a 22 percent increase in
the Antitrust Division's budget and a 32 percent increase in the FTC's
budget. Specifically, Clinton requested $134 million for Justice's
antitrust activities for fiscal 2001, but the House has approved $113.3
million, just $3.3 million more than the current budget authority level.
The House has also signed off on $134.8 million for FTC salaries and
expenses-$29.8 million less than Clinton requested, but $9.8 million more
than this year's level.


The funding levels have outraged House Appropriations ranking member David
R. Obey, D-Wis., because of the mushrooming number and complexity of
mergers and acquisitions. Obey said that in the past eight years,
"the capitalization of American business has exploded from $4.3
trillion to more than $12.7 trillion," and this "explosion in
capitalization means that some companies have the capacity for acquisition
that is unimaginable, or would have been just a few years ago." To
avoid radical changes in the free enterprise system, Obey argued:
"We've got to have the [antitrust] resources that prevent this
society from turning from a capitalist society into an
oligarchy."


House Judiciary Committee Chairman Henry J. Hyde, R-Ill., and ranking
member John Conyers Jr., D-Mich., have also supported more funding for
antitrust enforcement. They note that antitrust enforcers have brought in
about $1.4 billion in criminal fines since 1997; few government programs
bring in so much more revenue than is spent on them.


"We cannot overstate the importance of effective antitrust
enforcement to the health of the United States economy," Hyde and
Conyers wrote to House appropriators earlier this year. "A huge swell
in mergers in recent years, rapidly changing technology, and the existence
of international criminal cartels have all combined to severely strain the
agencies' resources."


The letter indicates a bipartisan approach to antitrust enforcement, but
more than a few congressional Republicans oppose vigorous action by
federal trustbusters. Hyde underscored this point in a little-noticed
article he wrote this spring in the American Bar Association magazine
Antitrust that included an impassioned plea to his fellow
Republicans.


"One belief unites Republicans on economics: the freer the markets,
the greater the prosperity," Hyde wrote. "Antitrust law sustains
free markets and dissipates political pressure for government regulation.
For that reason, Republicans, and indeed all citizens, should support it
wholeheartedly."


The Judiciary chairman continued: "Unfortunately some Republicans
have criticized enforcement of the antitrust laws, claiming that it allows
government to regulate the economy and stifle innovation. On the contrary,
antitrust law is the antithesis of government regulation."


Party Politics?


In their study, Foer and Lande noted that "in recent years, it has
seemed that antitrust was more of a Democratic than Republican
interest." But they said that such a shift would constitute a
reversal of the parties' historical roles.


"The Republicans Sherman and Harrison started the federal antitrust
mission," Foer and Lande pointed out, referring to Republican Sen.
John Sherman of Ohio, who authored the Sherman Antitrust Act of 1890 that
was signed into law by Republican President Benjamin Harrison.


Since then, a series of Republican Presidents, starting with the first
important presidential trustbuster, Theodore Roosevelt, have worked to
bolster antitrust efforts. Even the Reagan Administration, which Foer and
Lande concede slashed antitrust enforcement actions, "remained
faithful to narrowly defined core values of antitrust, particularly
bolstering its price-fixing agenda, and, indeed, brokered the landmark
AT&T consent decree," which broke up the huge telephone
company.


How will the next President handle antitrust policy? Al Gore and George W.
Bush haven't said much, which may be understandable, given the fact that
antitrust does not register as an important issue in public opinion
polls.


Nevertheless, the next President-and the next Congress-will set the tone
and pace for antitrust policy. Should Gore prevail, there is no indication
that he would part company with the Clinton Administration's enforcement
policy. After all, on the controversial Microsoft litigation, Gore made
clear his support for vigorous antitrust enforcement before a crowd of the
company's employees last November. "If dominance in one area is used
to prevent competition in another area, that is wrong," Gore
said.


Bush, according to a Financial Times of London interview cited by Foer,
has indicated that he would target antitrust action to price-fixing-a
position that leaves open the issue of whether he would be as aggressive
as the Clinton trustbusters have been in reviewing mergers.


The Texas governor has said he would like an out-of-court settlement of
the landmark Microsoft case. Though that stance may help Bush in
Microsoft's home state of Washington, where the presidential race is
highly competitive, antitrust policy issues probably won't make much of a
dent otherwise on Election Day.


Instead, expect more hand-wringing over the trustbusters' tight budgets,
more hot rhetoric from Capitol Hill, and more lobbying and hefty
contributions to lawmakers, courtesy of companies in the midst of mergers.
But don't expect much to change.


Michael Posner is a correspondent for National Journal News Service.
National Journal Senior Editor W. John Moore and Assistant Editor Shawn
Zeller also contributed to this article.


Kirk Victor and Michael Posner

National Journal