Administration Showing a More Aggressive Stand on Antitrust
NEW YORK (AP) _ When Gillette Co., a household name in the shaving business, said it would acquire part of the Wilkinson Sword blade and razor line last month, it looked like a good deal.
Too good, if you ask the Bush administration.
Gillette already had an estimated 64 percent of the U.S. blade and razor market, and the company’s plan to take over Wilkinson’s 1.8 percent share set off alarms in the Justice Department’s antitrust division - alarms that were largely muffled during the Reagan years.
Analysts expect more bells to sound. A year into George Bush’s presidency, they say there are signs the government is taking a more aggressive stance on enforcing antitrust rules than the laissez-faire approach of the Reagan administration.
″I am clear in my mind that the Bush administration will be less lenient, less lax in merger enforcement,″ said Robert Pitofsky, a Georgetown University law professor who described the Reagan administration as ″more lenient about merger policy than anyone has been since the late 1930s.″
Lawrence J. White, a New York University professor who was chief economist in the Justice Department’s antitrust division during Ronald Reagan’s first term, agreed: ″I just have a sense both from the rhetoric and the actions (of Bush administration officials) that a tougher line is being taken.″
The rhetoric White referred to was in the form of statements by James Rill, head of the Justice Department’s antitrust division, and Janet Steiger, who chairs the Federal Trade Commission.
Rill, in one of the first declarations of Bush administration antitrust policy, said last November, ″The fact is that antitrust is critical to the well-being of the American economy, and plays a vital role in the governing process.″
Meanwhile, Ms. Steiger, who appeared with Rill at a Harvard University lawyers conference, said the FTC would be more vigilant in examining proposed mergers than it was during the Reagan administration.
Rill’s division is now challenging Gillette’s plan to buy Wilkinson’s blade and razor business outside of Europe on the grounds the deal would reduce competition in this country. It has asked both companies to submit information and documents about the planned acquisition by Jan. 29.
But not all observers believe there’s been a big change in government policy under Bush.
″Put the noise aside, there’s nothing substantive,″ said Sam Pelzman, an economics professor at the University of Chicago Graduate School of Business. However, he added, ″You hear that it’s toughening up. It’s probably a signal.″
Pitofsky, who was an FTC commissioner during the Carter administration, predicted that under Bush there would be ″far more investigations of mergers than was the case a few years ago ... (and) challenges to the kinds of cases that sailed through″ the Reagan administration.
The shift in policy comes as no surprise - in fact, it was anticipated in 1988, the year that takeover activity reached its peak. Analysts said then that many corporate acquirers wanted to get their deals done before the permissive Reagan administration left office.
The changed takeover environment, with mergers and acquisitions slowed considerably by a virtual halt in junk-bond financing, may also make it easy for the administration to appear more activist.
But it’s not just heavily leveraged buyouts that the Bush administration is looking at.
White, the NYU professor, pointed to the Justice Department’s opposition last spring to Eastern Airlines’ plan to sell gates at Philadelphia International Airport and some of its routes to USAir, which already had a large presence in the Philadelphia market.
He also noted the department had scotched plans by Delta Air Lines and American Airlines to merge their computer reservation systems.
″It would have been a tougher call″ for the Reagan administration to make, White said.
The professors predicted that as time goes on, the new attitude will become even more apparent.
″It takes some time for a change of policy to work itself through the pipeline,″ said Pitofsky. But he added, ″Most lawyers who work in this field believe that the rules are going to be tightened.″