had the firms not acted under a formal regulatory scheme. They note that the reduction in capacity bore little resemblance to the carefully crafted readjustment plans and was probably a result of market forces or technological breakthroughs. 131 There is no indication, however, whether approved joint sales or distribution efforts have actually achieved distributional efficiencies.
A major difference between Japan's approach and the one I suggest is that the industries designated in Japan have little prospect for becoming successful international competitors. Japan's legislation was directed mainly at industries facing long-term competitive problems caused by high petroleum-based energy costs. 132 Many of these distressed Japanese industries cannot compete against imports in Japan. This would lead one to expect that the cost to Japan of permitting these cartels would be quite high. Not only is domestic competition diminished, but some protection from imports would seem necessary if, as seems likely, domestic prices were expected to rise in the short run. 133 Japan may feel that this approach produces national benefits that outweigh consumer welfare losses; these benefits, however, are not likely to enhance national wealth. Indeed, even Japan's government grew disenchanted with its distressed industry policy. 134 The likely costliness of Japan's approach, and the country's shift in policy, reinforces the view that a U.S. distressed industry cartel policy must be carefully limited to industries that have a prospect for producing net economic gains.
Section I has reviewed three antitrust approaches to integration in internationally distressed industries. The first approach tests distressed industry mergers under the Justice Department's 1984 Merger Guidelines. Despite the fact that the theory of the Guidelines reflects a simple model (collusion and price raising), analysis of such mergers is not simple. The Guidelines provide no method for moving beyond a geographic market defined as the United States with imports. Furthermore, the Guidelines provide for an uncertain discount (but up to 100 percent) for imports under constraint, do not consider the effect on a particular merger of industrywide financial distress, and remain vague on the trade-off between efficiencies and lessened competition. The overall tilt of the collusion approach, however, is to make international distressed industry mergers less likely to pass under the Guidelines than would a similar merger in a healthy industry. Of course, the discretionary play in the Guidelines, coupled with current enforcement policy, may mean that most of these mergers will somehow manage to pass muster (a peculiar twist on Justice Stewart's