Federal Trade Commission Chairman Michael Pertschuk yesterday urged Congress to consider legislation giving the antitrust enforcement agencies explicit authority to challenge conglomerate mergers.
In hearings before the Senate Antitrust and Monopoly Subcommittee, Pertschuk complained that conglomerate mergers - mergers of companies with essentially unrelated lines of business - are rising dramatically but the government is generally powerless to stop them.
"Simply stated, under current interpretations of existing law, we cannot reach most of these mergers," Pertschuk said.
Last year when Mobil Corp. and Marcor Inc. merged, combining the seventh largest industrial company with the seventh largest retailer, "the antitrust enforcers scrambled unsuccessfully for a theory" to challenge it, he said. "But you . . . must recognize that there may be no legal method, short of legislation, to prohibit such a merger."
There should be explicit authority to consider whether such mergers may have anticompetitive effects and to challenge them, the FTC chairman argued.
"Unrestrained conglomeration could conceivably result in the concentration of an enormous aggregation of economic, social and political power in the hands of a small number of corporate leaders, responsible in a formal sense to stockholders but in a real sense only to themselves," he warned. "This vision of a relatively few companies dominating the private sector is not so far from reality."
Pertschuk said he believed the legislative history of the 1950 Celler-Kefauver "Antimerger" amendment to the Clayton Act indicates it "may well have been intended to deal with Congress' concern with the tendency of mergers to increase economic concentration in the long run" but that current court interpretations of the statute do not give the FTC and Justice department the "tools to do the job."
What about Section 5 of the FTC Act, which prohibits unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce? Chairman Edward M. Kennedy (D-Mass.) asked.
"I think we're going to try," Pertschuk replied.
However, Alfred Dougherty Jr., director of the FTC's Bureau of Competition, was pessimistic about success with Section 5. When Kennedy asked whether Section 5 didn't give the FTC "additional authority" Justice doesn't have to challenge mergers like Mobil Marcor, Doughterty replied "arguably."
"There are significant problems" with that approach he said. Noting that Section 5 had never been applied separately in such a merger case before, he said the FTC would need "significant factual situations" for testing.