The Federal Trade Commission staff has come out against proposals to facilitate mergers in declining industries by relaxing antitrust laws.

The FTC's bureau of economics concluded that such a move would do more harm than good by opening the way for mergers that hurt competition without creating jobs or improving the country's trade balance.

The FTC staff report, which was released yesterday, appears to contradict Commerce Secretary Malcolm Baldrige's position that the government should grant a five-year exemption from most antitrust laws for mergers, acquisitions and joint ventures in industries that have been injured by imports.

The FTC report comes as a White House Cabinet working group is evaluating various proposals for changing the antitrust rules.

The antitrust laws allow the FTC or the Justice Department to challenge a proposed merger if it would hurt competition, for example by enabling the merged entity to control so much of the market that it could raise prices and reduce output above the levels that would occur in a competitive market.

Baldrige has argued for months that outmoded antitrust laws "hamstring economic development and hobble U.S. exports." Specifically, he has called for repeal of section 7 of the Clayton Act, long a pillar of antitrust law. He says the antimerger provisions hurt U.S. competitiveness by preventing companies from pooling resources and shrinking excess capacity in declining industries, such as steel.

While not referring to any specific proposal, the FTC bureau of economics has concluded that "a policy liberalizing the antitrust laws specifically for declining industries would be ill-advised."

The FTC staff said, "There is no persuasive reason to believe that the mergers that would be allowed under the liberalization in question would increase employment or improve the trade balance. Indeed, anticompetitive mergers that do not improve efficiency could reduce U.S. employment and U.S. firms' ability to compete with foreign firms as domestic prices rise and output falls."