Bork's influence already felt in enforcement of antitrust laws
What does Robert H. Bork's nomination to fill a vacancy on the Supreme Court mean for business and consumers? Potentially, quite a lot.Skip to next paragraph
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One important arena in which Mr. Bork already has had enormous influence is the realm of antitrust law. Scholars and lawyers say his views, and those of a handful of like-minded intellectuals, have had significant impact on antitrust enforcement during the Reagan years.
The impact? Mergers, big and small, have flourished - 16,000 in the past seven years. Of the more than 8,000 submitted for review to the United States Justice Department's antitrust division, 29 were challenged. There have been 1,277 mergers valued at over $100 million.
Rushing past that slight federal challenge, the US economy has seen an amazing torrent of hostile takeovers, corporate raiding, and conglomeration of companies that has occurred in large part for a fairly simple reason - because the federal government was determined to allow it - and business quickly came to know it wouldn't be slapped with a federal antitrust suit.
The current ``permissive'' approach to antitrust was spawned by economic theories espoused by Bork and others. It has taken deep root in the Justice Department's antitrust division. Part of the theory holds: Big business isn't always bad - in fact it can help the US be more competitive - a very attractive idea that economists violently disagree about.
``Bork is one of the two or three most influential conservative thinkers on antitrust enforcement,'' says Robert Pitofsky, dean of Georgetown University Law School, and an antitrust expert. ``He is at the right margin of that group - he would be the most permissive of these conservatives.''
Influenced strongly by the ``Chicago school'' of free-market economic theory, Bork's roots go back to the University of Chicago and his study under antitrust scholar Aaron Director.
As a Supreme Court Justice, Bork would be in a position to band with longtime friends and fellow conservatives William Rehnquist and Antonin Scalia to reshape the high court's rulings on antitrust. Thus far, however, the impact of Bork's views has been felt most keenly at the antitrust division.
Under the influence of former antitrust chief William Baxter and Bork, the division has taken on less of an enforcement or prosecution role, and much more the character of a regulatory body, says Timothy Brennan, associate professor of public policy and economics at George Washington University.
Prosecution efforts that had been weighed solely on the basis of the language of the Sherman and Clayton Antitrust Acts, and legal precedent have been bumped aside by economic theory as the basis on which to weigh a merger.
``Economic efficiency'' and the assessment of market forces is the dominant factor in determining enforcement today. Scholars say economists tend to view mergers more benignly than do lawyers or prosecutors.
``What's happening [within the antitrust division] is that neoclassical economic theory is being used to justify wealth transfers to the seller,'' says James Ponsoldt, an associate professor of law at the University of Georgia, a member of the antitrust division from 1975 through 1978. ``One of the oddest things is that scholars like Bork claim that Congress intended that when they wrote the Sherman Act.''
Judge Bork's views are enunciated in a book entitled ``The Antitrust Paradox: A Policy at War With Itself,'' which has been influential with the current administration.
Says Bork in his book: ``In modern times the Supreme Court, without compulsion by statute, and certainly without adequate explanation, has inhibited or destroyed a broad spectrum of useful business structures and practices. Internal growth to large market size has been made dangerous. Growth by merger with rivals is practically impossible, as is growth by acquisition....''
That was Bork writing in 1978. But more recently, Bork was one of the first to recognize the changes in the antitrust department, and that the merger boom would continue unabated as long as antitrust enforcement was moderated by economic theory alone.
Bork was quoted in a 1981 Time magazine article saying: ``We've won the war intellectually. ... A lot of mergers that should have taken place were held back for years because of the Justice Department's antitrust division.''
Still, the rise of economics as the preeminent means of determining a merger's validity has not been unopposed.
Critics like Sen. Howard Metzenbaum (D) of Ohio says antitrust enforcement as currently practiced is not on par with the intent of Congress, nor has it been as pragmatic as it bills itself.
``In my view, the record is clear,'' Senator Metzenbaum says. ``The Reagan administration has created the most permissive merger climate of the last 70 years. It claims to be for free competition. Yet it has turned its back on the antitrust laws - laws that are essential to making the free enterprise system work.''
Roger Anteweldt, the antitrust division second in command believes otherwise. ``In international markets you want to be as efficient as you can and there have been a lot of mergers related to that.''
``There is perhaps a concern about a perceived increase in concentration in the American economy, and concentration bothers some people from a social setting. But to the extent that there are concerns about that, the antitrust laws aren't the appropriate way to get at it.'' Others disagree.
``We've seen over and over again in this country and many others, that if government does not regulate capital to maintain some roughly equal or fair distribution of wealth, or at least preclude the dark side of capitalism, then the democratic process rises up and goes overboard'' in restricting mergers, Ponsoldt says.
Such is already happening on a state level, he says, and evidence of a political backlash to the ``era of the merger'' is building.