The administration's top antitrust official denied yesterday that this year's wave of corporate mergers was generated by the business community's perception of uncertainty in the government's merger policy.
In fact, William Baxter, the assistant attorney general for antitrust, told a House subcommittee that despite wide attention to the current merger trend, data indicate that the merger boom was more intense during the late 1960s. Baxter said that mergers in 1968 would have totaled $52 billion in 1972 dollars, compared with $38 billion for 1981 and that there were 25 percent more mergers in 1968 than there have been this year.
"The suggestion that the current merger wave . . . is a response to increased uncertainty about enforcement policy seems to me rather dubious," Baxter said.
He suggested that large mergers can serve useful purposes and said that any attack on these transactions "could impair" market mechanisms for important asset transfers.
"Merger activity in general -- although not in any particular case -- is a very, very important feature of our capital markets by which assets are continuously moved into the hands of those managers who can employ them most efficiently, and interfering in a general way with that process would be an error of very substantial magnitude," Baxter said.
But Baxter's assertions about the significance of current merger activity were challenged by Acting Federal Trade Commission Chairman David Clinton, who noted that merger activity in 1975 totaled $11.8 billion, compared with $35.7 billion in the first half of this year.
"I do not believe we should dismiss the current merger wave as an essentially harmless periodic phenomenon," Clanton said, asserting that current antitrust laws are adequate to address the competition problems raised by mergers.
"On a broader public policy basis, it seems highly desirable to explore further both the economic and noneconomic effects of conglomerate acquisitions," Clanton said.
Baxter continued to stress that corporate decision-makers would have to rely on existing case law in evaluating the departmenths position on transactions until the Antitrust Division prepares a revision of the department's 1968 merger guidelines.
He also re-emphasized that he does not believe there are significant problems raised by vertical and conglomerate mergers unless they threaten competition in well-defined markets and said the "theoretical underpinnings" behind attacks on those kinds of mergers have been "thoroughly discredited."
Baxter and Clanton testified at a rare late-August hearing of the House Judiciary subcommittee on monopolies and commercial law, called largely because of the concerns of the panel's chairman, Rep. Peter Rodino (D-N.J.), about merger trends.
Rodino charged that the Attorney General William French Smith's "bigness-is-not-necessarily-badness" statement "seems to have been a signal to many in the business world that enforcement of the Clayton Act will be relaxed."
Rodino also said the current merger trend raises questions about "the social and political effects of the accumulation of enormous economic power by a few firms" and about the effects of giant mergers on credit markets.
Another subcommittee member, Rep. John Seiberling (D-Ohio), suggested that Baxter's criticism of enforcement policies designed to block some reciprocal arrangements between companies amounts to "rewriting the antitrust laws."
"We're deciding where we will devote enforcement resources, and the pursuit of cases which may potentially involve reciprocity is not one of those," Baxter responded.