The White House will propose "substantial" changes in federal antitrust laws to prevent future administrations or courts from reversing Reagan administration policy favoring corporate mergers and competition, the head of the Justice Department's antitrust division said this week.
Assistant Attorney General Douglas H. Ginsburg would not discuss specific reform proposals now in preparation by President Reagan's Cabinet advisers. But in an interview Tuesday, he said he personally favored revising a key provision of the 71-year-old Clayton Act, one of two pillars of antitrust enforcement, to make sure it does not become a roadblock to future mergers that administration officials believe would benefit the economy.
"I think it would be a real public service to basically update Section 7 of the Clayton Act , which hasn't been substantively altered since it was enacted in 1914 and hasn't really been reviewed by the Congress . . . since 1950," Ginsburg said.
Section 7 prohibits corporate mergers or acquisitions that "may" lessen competition or "tend to create a monopoly," and some administration officials argue that this standard is so vague that it discourages beneficial mergers that create stronger competitors. The revision of Section 7 has been a central question confronting Reagan's advisers, who hope to complete work on a legislative proposal by year's end.
Thirty-five years have passed since the Clayton Act was last revised, and Ginsburg said it is now time to ask "Congress to incorporate into the statute a modern view . . . rather than allowing interpretations to fluctuate from one administration to the next."
The administration's antitrust review also has focused on changing federal law to reflect a shift in the guidelines used by the Justice Department in approving or opposing corporate mergers.
Twice in the past three years, the Reagan administration has revised these merger guidelines. In its most recent version, adopted in 1984, the antitrust division said it would look much harder than in the past at judgmental factors in assessing mergers. It would lean less heavily on a "numbers" approach based on measurements of the size and number of competing companies in a market.
Factors such as the extent of foreign competition, the pace of change in markets, including the introduction of new technology, and the financial problems of companies would be given much greater weight in viewing mergers, the 1984 guidelines provided.
Ginsburg has said that the Reagan administration's current antitrust policy is "right on target," but noted in the interview that "there is great uncertainty about the future, about what policy might be like at some future date or what some future court decision might bring."
In Ginsburg's view, antitrust laws have been abused and "perverted" at times in the past, to prevent mergers that would have created more competition and a stronger economy. "In the 1960s, there were cases brought by the government to prevent mergers that in retrospect . . .were obviously pro-competitive," he said.
"Justice Byron White once remarked that the only principle that seemed to unite them these cases is that the government always wins. And that's intolerable -- the unprincipled jurisprudence that one gets when one introduces noneconomic considerations to a statute that's intended to operate on economic markets," Ginsburg said.
By revising Section 7 and amending the law to reflect the new guidelines, Congress and the administration could make an important clarification of merger policy, he indicated.
"The uncertainty point really applies on the merger side and that's where codification of the guidelines or some reformulation of the standard in response to modern economics and recent court decisions would have the primary benefit of dispelling uncertainty," Ginsburg said.
Some experts have said that the existing antitrust laws need not be changed, that their broad language allows flexibility in enforcement policy and that this flexibility permits policy to evolve as economic circumstances change.
Ginsburg disagreed: "It really does concentrate unwarranted power in the hands of government to have an over-broad prohibition, which is then simply enforced in a sensible fashion. And that power can and has been abused in the past."
But administration hopes for a revision of Section 7 must contend with the opposition of Rep. Peter Rodino (D-N.J.), chairman of the House Judiciary Committee. Rodino told a recent conference on antitrust that he finds the idea "very disquieting" and "precipitous."
"Antitrust, it would seem, is once again being made the 'whipping boy' for everything from record trade deficits to the perceived loss in U.S. technological leadership . . . ," he said.
"If there is any connection between the antitrust laws and these seemingly intractable economic problems, it would seem that more vigorous competition -- not less enforcement -- is needed," Rodino said.
Some business groups have called for limited revision of the nation's antitrust laws rather than the sweeping changes Ginsburg seeks. The business groups fear that a bid for wholesale changes would tie the issue up in Congress.
White House Cabinet councils on domestic and economic policy reportedly have recommended that the administration seek legislation that would change the act to reduce uncertainty and build in the revisions in antitrust policies and guidelines already adopted during the Reagan administration.
Ginsburg and Assistant Treasury Secretary Manuel H. Johnson co-chaired an administration working group on antitrust reform, which presented a package of recommendations to a joint meeting of the Cabinet councils last week.
Ginsburg, who said he is looking forward to advancing the administration's proposals, said antitrust penalties are another major area where he would like to see reform.
Triple damages should be awarded only against firms found guilty of price fixing, bid rigging and "furtive, conspiratorial, per se unlawful activity," he said.
Too often, however, the threat of triple damages can deter businesses "from experimenting with new ways of doing things," he said.
"The difficulty is drawing the line that captures this difference. The clear cases are easy. Price-fixing should be subject to treble damages and openly practiced distribution practices, it's clear to me, should not be subject to treble damages," Ginsburg said.
The antitrust division has a proposal that attempts to draw this line, he said, adding that "the silliest idea" is to "give the discretion to a court after a trial."
Ginsburg said, "It is quite reasonable to think Congress will react favorable to legislation that is solidly based.
"Current circumstances, international competition, the consensus in legal, academic and economic communities all suggest widespread support in Congress for reform" if it is "sensible and well targeted," he said.
He said the package was "considered, well crafted, long overdue, extremely important to the competitive position of this country" and added that " 'sweeping' is in the eye of the beholder."
The goal, he said, is to restore the antitrust laws to their "historically intended purpose, to preserve competitive markets -- not [individual] competitors."