Washington — The US Justice Department has decided to oppose a big merger in the trouble steel industry and is sending signals that a second proposed steel company marriage may not be approved.
Assistant Attorney General J. Paul McGrath announced Wednesday that the government would file suit to block a proposed merger between LTV corporation and Republic Steel Corporation if the two companies tried to proceed with a plan announced last September.
"We concluded that the merger would sharply increase concentration in critical parts of the steel industry where only a few domectic companies complete," he said. That concentration, or control of a large portion of the steel industry where only a few domestic companies compete," he said. That concentration, or control of a large portion of the market by a few companies, would risk "increased priced due to collusion," he asserted.
Currently Jones & Laughlin, an LTV subsidiary, is the nation's third largest steel producer and Republic is the forth.
Mr. McGrath said the decision in the LTV-Republic merger was reached "separate and apart" from Justice Department considertion of a merger proposed in February between United States Steel Corporation, the nation's largest steel producer, and National Steel Corporation, the seventh largest.
But he noted that Wednesday's decision "may well provide . . . other people in the industry with guidance" about the nature of acceptable mergers.
If the US Steel-national and LTV-Republic mergers were both allowed, the resulting two firms "would together control close to 50 percent of domestic carbon and alloy sheet steel production," McGrath said. Sheet steel is used in a wide variety of goods including automobiles and appliances.
"That is really an enormous increase in concentration and that would be very troublesome under the law as it exists," McGrath told a press conference.
The Justice Department says it is willing to work with steel companies as they restructure to cope with uncompetitive costs, excess capacity, and incereasing imports.
"I certainly recognize that the steel industry needs help [and that] restructuring will continue and is necessary," McGrath said.
To avoid antitrust problems, McGrath suggested the possiblity of intercompany sales or exchanges of raw materials or semifinished products.
Another option he suggested was reshuffling or consolidating plants now under separate ownership.