The Merger Still Has Tough Time Ahead with Antitrust Rules Deal's Review by Justice Department `Isn't Going to Be a Piece of Cake'
Jon Sawyer Post-Dispatch Washington Bureau Chief, St Louis Post-Dispatch (MO)
Is Boeing Co.'s acquisition of McDonnell Douglas Corp. in the interest of American consumers?
If you're not sure, you're not alone: Economists and legal experts interviewed Monday were deeply divided, both as to whether the merger makes economic sense and whether the government's antitrust watchdogs are likely to let it go through.
Two former Justice Department officials were among those suggesting that the Clinton administration's antitrust review is likely to be more difficult, and its outcome less predictable, than officials of the two companies have suggested. "This isn't going to be a piece of cake," said Stanford University law professor William Baxter. It was Baxter, as the Justice Department's antitrust division chief under President Ronald Reagan, who rewrote the government's antitrust guidelines so as to make it easier to win approval for mergers that result in highly concentrated industries. Prior to that 1982 revision, Baxter said, a proposal to merge the two remaining manufacturers of commercial airliners and two major defense contractors might have been rejected as anti-competitive on its face. He said the current guidelines permit a more sophisticated analysis, among them the Pentagon's unique buying power and, on the commercial side, the existence of strong competition from Europe's Airbus Industrie Inc. But at the same time, Baxter warned, approving this merger means that the government would be forgoing, in McDonnell, the best source of competition that the currently dominant Boeing is likely to face. "There's a lot of potential competition there," he said, and that's what makes the antitrust decision tough. Also voicing caution was Robert E. Litan, who served as deputy assistant attorney general for antitrust under President Bill Clinton and who is now director of economic studies at the Brookings Institution. "This won't be an easy antitrust hurdle to overcome," Litan said. "I'm not saying it won't survive at the end of the day . . . but you've got a very highly concentrated market already in passenger aircraft and this (merger) would only concentrate it more." Antitrust experts predict that the Clinton administration will take six months or longer to review the proposed merger. The Federal Trade Commission's Office of Competition has overseen all the defense industry mergers over the past three years but the Justice Department's Antitrust Division might claim lead jurisdiction in this case because it involves nondefense business, too. …