Back in 1890 a Republican Congress passed the first federal anti-monopoly law and called it the Sherman Anti-trust Act. Today the Republicans in the White House and the Congress seemed to have forgotten that this law and the Clayton Anti-trust act of 1914 are the principal defenders of competition in interstate commerce.
The tidal wave of mergers and acquisitions during the Reagan years is further concentrating power in the nation’s economy. Nine out of ten of the largest mergers in U.S. history have occurred since 1981 and the Reaganites could care less about using the anti-monopoly laws against mergers. Reagan’s first anti-trust chief in the Justice Department, William Baxter, told me that he would not mind if only one hundred corporations existed in the U.S. as long as each one had no more than one percent of the total market.
The government’s support for a national anti-monopoly policy is weakening fast. Republicans like Senator John Heinz, who as a Congressman in the Seventies formed a Republican group to support the anti-trust laws, are silent. Democrats are cowed by companies saying they have to merge to remain viable. Most recent mergers however, are inspired by empire building, greenmail and the personal environment of the heads of the acquired companies. The head of Gulf Oil, for example, received nine million dollars after signing off on Chevron acquiring his company. Only the steadfast Senator Howard Metzenbaum (D-OH), a former millionaire businessman, is speaking out for a competition policy.
But there is some light on the horizon and from an unlikely quarter. It seems that the corporate raiders — those opportunistic take-over specialists who back down if their victim buys back the shares at inflated prices (greenmail) — are worrying the big fellows at the Business Roundtable — the leading big business lobby. Prodded by some oil companies and other members, the Roundtable is supportive of some new legislative restrictions against hostile takeovers drives.
In early April, the Chairmen of Phillips Petroleum Co. and Union Oil (Unocal) testified before a House Subcommittee asking Congress to end the tax deductibility on interest on money borrowed for hostile takeover attempts as well as an excise tax on greenmail.
A few days later in an interview with the Washington Post, Unocal’s chairman, Fred Hartley took on the Reagan government: “On competition alone,” he said, “this [the hostile takeover attempts of oil companies by the likes of T. Boone Pickens) should never have been permitted. There’s some peculiar ideas in government today… Uncle Sam is gonna lose out like mad: He’s got at least half a dozen virile companies no longer participating competitively [for leasing federal oil lands] against the remaining companies, so there will be no bids received from Getty, none from Gulf, none from Citgo and none from Superior, who were quite active, very active. That competition has been destroyed, Uncle Sam is the loser… Twenty five years ago it couldn’t have happened, because in those days government, I think, understood antitrust, and understood what this competition is all about.”
A few days ago, the nation’s largest hospital chain and the nation’s largest hospital supply company agreed to merge. There was no opposition by the Justice Department. Instead, the acting anti-trust chief, Charles F. Rule, expressed approval, saying that such vertical mergers would enable the merged company to “deliver products to consumers at lower costs” Sure, that and the Tooth Fairy will get you night time reading.
Presumably, since the Hospital Corporation of America will be able to buy its beds and gauzes from itself, it will hasten to give patients the savings instead of increasing its profits.
Before this country’s meets Art Buchwald’s prediction that someday there will be only two companies in the U.S., one controlling everything east of the Mississippi and the other everything west of that river, some party ought to rediscover the significance of the anti-trust laws to small business, entrepreneurs and a vibrant competitive economy for consumers. With the radical right wing dominating the Republican Party, that leaves the Democrats with a chance to newly rediscover an old idea.