Last year there were 80 corporate mergers involving $100 million or more, twice the number of the year before, and nearly six times the number in 1975.
And the total dollar value of all corporate mergers last year exceeded $34 billion, up from $21.9 billion the year before, and $11.8 billion as late as 1975.
To government regulators, those numbers spell trouble. As the power in the private sector becomes more concentrated, potential antitrust and monopoly violations increase, at least partially because such violations are much easier to perpetrate when fewer concerns and people are invloved.
In perhaps the most aggressive attack on antitrust violators in decades, the federal government is launching a three-pronged attack involving three very different men from three different areas of government.
Assistant Attorney General for Antitrh ust John H. Shenefield is already preparing new antitrust legislation that would virtually prohibit mergers of huge conglomerates and severely reduce the number of nergers and acquisitions in already-concentrated industries.
At the Federal Trade Commission, chairman Michael Perschuk and antitrust aides Daniel Schwartz and Alfred Dougherty Jr. have embarked upon an aggressive campaign to broaden the definition of antirust activity and develop new administrative restraints to stop certain mergers in their tracks.
And in Congress, the growing power of Sen. Edward M. Kennedy (D.-Mass), chairman of the powerful antitrust and monopoly subcommittee of the Judiciary Committee, has put new teeth in efforts to legislate against such activities, and to give the Justice Department and FTC support and prodding for their own efforts. One of the major areas of attack on the Hill will be an attempt to end many of the antitrust exemptions now permitting anticompetitive activity in such industries as trucking.
Only two weeks ago, for example, Kennedy called upon the FTC to develop a regulation forbidding oil companies from owning petroleum pipe lines. Although the end of such ownership has been unanimously accepted by government regulators -- particularly the Justice Department -- as a necessity, no individual agency or department has sought to force such an action because of the magnitude of the action and the prolonged legal challenge that likely would come from the oil industry. This latest action represents an entirely new government tactic that, if taken, could circumvent many of the difficulties that would normally plague any attempt at forcing divestiture.
"The public is thinking a lot about largeness," Kennedy said in a recent interview. "There is genuine concern about decisions that affect them, but over which they have no control. The mood out there among consumers is one calling for competition. The real question is, 'How do we give the consumer better goods and services at lower costs?'"
While Kennedy reiterated the need to keep strong health and safety regulation, he said that "in a general way there is no reason we can't get the government off the back of American industry in the area of economic regulation." This, he added, would include ending many of the protective regulations and antitrust immunities granted to certain heavily regulated industries.
Kennedy was the point man on the prolonged but successful congressional fight to end economic regulation of airlines. "Now we are looking at trucking, maritime, communications and other industries," he said.
And, Kennedy says, the relationship between himself and the Justice Department and FTC is "good. There is a consensus in the administration about antitrust, and we are all moving in the same direction."
The Justice Department's Shenefield agrees that cooperation among agencies is increasing. In the area of conglomerate mergers, for example, "We are on separate but parallel courses," he said of the efforts of Justice, the FTC and Kennedy.
Shenefield says the country is in the "middle of a major merger wave exceeding even that of the late 1960s, and many of these mergers have nothing to do with creating economies" -- the traditional reason given for a merger.
Instead, Shenefield said, "bCause of a stock market that has many companies valued unusually low, because of certain tax laws and benefits, because managers just like to manage bigger companies, and because a lot of companies have cash hordes, we are seeing more and more mergers today."
Shenefield and his staff are looking at whole new interpretations of antitrust laws. "We are looking at reversing the burden of proof in some cases," he said. "Should the merging companies, for example, have to show that their merger will have benefits in the marketplace?"
The legislation being prepared by Justice along those lines would ban any merger in which the resulting company would have annual sales or assets in excess of $2 billion, providing that each of the companies involved has at least $100 million in sales or assets.
Other arrangements outlawed by the proposed legislation would be those in which a $1 billion company tries to take over another firm that has at least a 20 percent share of a concentrated market, where that market totals at least $100 million in annual sales.
These prohibitions, Shenefield pointed out, would only be waived in cases where the companies involved could show "significant competitive benefits."
The Justice proposal appears in synchronization with legislative initiatives planned by Sen. Kennedy. "We are looking for a three-tier plan," Kennedy said, "that ould prohibit mergers of the largest economic units, force merging companies in the second largest groups to prove that their mergers would help competition, and essentially let the smallest companies exist under the present laws."
Shenefield has his staff working on several investigations likely to cause considerable controversy in the coming years. His own oil pipeline ownership study has led him to conclude that "we do have a pipeline problem, and it is logical that pipelines should be divested," but points to the fact that existing federal regulation in this area has been "imperfect, and even when sensible, can be subverted."
Justice is also in the process of attempting to gain corporate information for a case on the international petroleum industry. "We have received a substantial number of documents from domestic oil companies," he said, "but we are negotiating with foreign petroleum companies for their information."
Shenefield also heads up the 22-member National Commission for the Review of Antitrust Laws and Proce dures, which is expected to send its report to President Carter and the Congress next week calling for changes in the antitrust laws that would make it easier to prove that companies are attempting to monopolize markets.
That report complains that most courts have adopted "an unnecessarily strict standard" for proving antitrust violations. Existing standards, in effect, require proof that the company holds a near-monopoly market share before it can be charged with monopolistic practices.
The commission also recommended that structural reform -- such as divestiture -- rather than conduct or injunctive relief, should be the presumed remedy whenever a violation of the merger or antimonoppoly laws has been established.
"The most important stage of the commission's work is yet to come," Shenefield said. "Implementation." Reminded by Sen. Kennedy that most presidential commissions have lots of smoke, but no fire, Shenefield said it remains to be seen whether the commission will have an impact. "We are readying a number of legislative proposals that would implement our recommended changes, and obviously some will be more successful than others."
Over at the Federal Trade Commission, Bureau of Competition director Alfred Dougherty Jr. cited several areas in which the FTC plans to be active on the antitrust front. The FTC's new pre-merger notification program, which requires companies with more than $100 million in assets to notify the FTC before acquiring $10 million or 15 percent of another firm, is expected to help the agency earmark potential lawsuit targets.
"In the energy area," Dougherty said, "we will continue to litigate the Exxon case, and have reissued subpoenas. Also, we have been asked by several congressmen and senators to help draft legislation, including 'cap' proposals (to limit the amount of ownership of coal and uranium businesses by oil companies)."
The FTC is also getting quite aggressive in the transporation area, with a controversial major structural investigation of the auto industry. "We have subpoenaed documents from the auto industry," Dougherty said, "and we hope to get them during the next year."
Also in the transportation area, the FTC is participating -- before the Interstate Commerce Commission and on the Hill -- in the trucking deregulation fight.
In the area of mergers, Dougherty said, "We are pursuing a vigorous horizontal merger program. We are trying to extend the law in the conglomerate area as much as we can, and we are pushing for conglomerate merger legislation."
Dougherty says that the chances of conglomerate merger legislation depend a great deal upon whether the current merger wave continues. "If a large number of $3 billion, $4 billion or $5 billion companies continue to be gobled up, we will have a chance," he said.
In two other controversial cases, the FTC is attempting in part to set new antitrust ground rules. In one action, the agency has charged that Grand Union could have used "a less anticompetitive manner" in its plan to merge with Atlanta-based Colonial markets. In another action against DuPont, the FTC is charging that the company attempted to monopolize the market in titanium dioxide, a whitener for paint pigments in paper, primarily through its own expansion of capacity. "We charged them with attempting to monopolize the market through preemptive expansion of capacity a decade in advance," Dougherty said.
"Most of what we're trying to do," the FTC's Pertschuk says, "is free up the marketplace from restraints, both imposed by government and imposed by business."
But a new, more complex, antitrust issue looms on the horizon for the domestic trust-busters: the international implications of U.S. government actions. Many foreign countries have been less than thrilled about U.S. investigators prowling around in search of evidence for antitrust cases. And several cases -- particularly involving energy issues such as oil and uranium -- are expected to bring that problem to the forefront in 1979.