Newspaper article The Christian Science Monitor

Washington Works to Slow Merger Train A Recent Spate of Corporate 'Megadeals' Is Shaking the Dust off US Antitrust Laws

Newspaper article The Christian Science Monitor

Washington Works to Slow Merger Train A Recent Spate of Corporate 'Megadeals' Is Shaking the Dust off US Antitrust Laws

Article excerpt

The trust-busting fervor of Teddy Roosevelt's day isn't exactly back - but today government regulators are once again swinging the big stick of US antitrust laws.

Lockheed Martin Corp.'s purchase of Northrop Grumman is only the latest corporate megadeal to face Washington opposition. In recent days federal lawyers have blocked two drug-firm mergers, questioned Compaq Computer's acquisition of Digital Equipment, Corp., and subpoenaed MCI for information about its planned marriage to WorldCom Inc.

Then there's the Justice Department challenge to some of Microsoft's bare-knuckle business tactics. That's a fight that could develop into the government's biggest antitrust case since spats were fashionable. The pace of business agglomeration is one reason for the new enforcement atmosphere. Last year, the US economy saw a record $1 trillion worth of mergers. The nature of these marriages can be an issue, as well. Many now occur within the same industry, lessening the number of domestic competitors. And the political context of antitrust has changed. Justice and the Federal Trade Commission are full of eager Clinton appointees armed with new enforcement theories. "There certainly has been a greater interest in the last 5-1/2 years in finding {antitrust} cases to win," says Robert Crandall, an economics fellow at the Brookings Institution here. "But that doesn't seem to be slowing down mergers." Case in point: the defense industry. Lockheed Martin and Northrop Grumman officials were surprised last weekend when the Pentagon expressed some displeasure with their merger, currently set for consummation in late April. For years, the Department of Defense had been telling defense contractors that given the downsized military of the late '90s, consolidation was their only option. Thus Lockheed and Northrop thought their action was, in essence, doing the government's bidding, especially in light of the fact that they predicted $1 billion in savings to their Pentagon customer due to increased business efficiencies. Now defense officials are concerned that concentration in the weapons business may stifle innovation and raise prices in the future. They may insist that the new firm divest itself of significant assets as the price of winning regulatory approval. …

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