Trustbusters in mergerland
Big is not necessarily bad. Small is not necessarily good. And, as a colleague often says, the reverse also is true. This is worth keeping in mind when noting the diagreement within the Republican Party over the government's role in the great American saga of big getting on the business scene.
The split has emerged over what some Republicans see as administration backsliding from their party's traditionally vigorous antitrust policies. Senator Danforth of Missouri, for example, finds the administration demonstrating a "singular" lack of interest in antitrust enforcement. Whereas he wants diligent enforcement to maintain the free and open competition that is "at the heart" of Republican philosophy.
Senator Packwood of Oregon warns against a repetition of the administration's attempt to abolish the Federal Trade Commission's antitrust branch. Senator Gorton of Washington goes so far as to cast the lone vote against confirmation of President Reagan's nominee as chairman of the FTC, James Miller. Mr. Gorton suggests that administration indifference toward antitrust might be a factor in the current spate of company mergers.
This is not to judge specific mergers before the antitrust people have themselves looked into them. But, apart from legal questions, one bothersome aspect is a temptation for companies with available resources simply to buy up another firm instead of plowing them back for productive purposes. It would be unfortunate for potential short-term gains to substitute for developing or improving products or services in the manner that previously made American industry flourish -- and that the Reagan administration itself wants to encourage. Is this the kind of investment that will revitalize America?
The answer will depend on what is done with the extra size achieved when big swallows big. The merging of financial institutions could serve to limit competition -- or to offer new forms of competition through providing additional customer conveniences. The merging of energy companies could hold back the development of forward-looking products in the interest of existing ones -- or speed advanced designs along with additional clout. The expanding of corporate bureaucracies could lead to sluggishness and waste -- or to showing how more people actually can do more work.
The choices are clear. But the point of choice should be reached only within the borders of the law. That is why the Republican Party can be grateful for members who are trying to keep its antitrust instincts strong for the good of the count ry.