At the same time that new technical concepts of mergers and antitrust enforcement were winning acceptance among lawyers and judges in the United States, the world was changing.
As World War II receded, a highly competitive global market -- and global manufacturing base -- came into being, with Japan assuming legendary proportions as an industrial power. American basic industries -- especially steel, autos, and textiles -- were beset by intense competition from abroad.
''The development of a world market has had much to do with (the evolution in antitrust thinking),'' says longtime antitrust-reform advocate Robert H. Bork. ''When the FTC (Federal Trade Commission) filed its antitrust suit against General Motors (in 1949), it assumed GM's position was unassailable. Then the Japanese and the Germans made that look silly. It has been the practical demonstrations like these that have changed thinking.''
American business mergers are sometimes seen as a way of helping basic industry cope with this new globalism without having to resort to the dangerous expedients of tariffs, import barriers, and government-business collusion. Merger and antitrust policy is wrapped in with the keenly felt debates between free traders and protectionists, the argument over whether to develop a national industrial policy, and the push to deregulate the economy.
In the past, says J. Paul McGrath, assistant attorney general in the Department of Justice's Antitrust Division, antitrust enforcement policy ''was rarely based on rigorous economic analysis. In part it was based on simple fear of change.''
But no longer does the US have the luxury of avoiding change, McGrath says: ''Today we must focus on (competing) companies based in Osaka and Seoul and Cologne.''
One of the most important factors in deciding whether to allow a merger, according to new Justice Department antitrust guidelines, is the ''level of concentration in a particular market -- whether it be a national market for a particular drug or a local market for freshly baked doughnuts.''
Or a global market for autos and steel.
Though there are but a handful of steel companies and auto companies in the US, they compete in a global market. Consequently in recent weeks, the Justice Department allowed the LTV-Republic Steel deal, and the FTC allowed the General Motors-Toyota joint venture.
Diversity of big steel companies in the US may be decreasing, but domestic ''minimills'' are on the rise. More foreign countries are producing steel than in years past, including Japan, members of the European Community, and Brazil.
Still, steel is a vital military material and even laissez faire economists recognize that the US cannot be without a steel industry. Judge Bork points out , however, that this is a political decision to be made by Congress and the president, not something to be weighed into antitrust policy. The Justice Department's McGrath concurs, noting that ''the best way to meet foreign competition is to ensure that our own industries are competitive, which is precisely the purpose of the antitrust laws.''
''I firmly believe,'' Commerce Secretary Malcolm Baldrige said after the Justice Department allowed the LTV-Republic merger, ''that the steel industry should not have the right to merge for competitive reasons and to protection from global competition. (Protection of the steel industry) 10 to 15 years down the road would cause real problems.''
Mr. Baldrige notes that the Clayton Antitrust Act was introduced in 1913 and not revised until 1950 and that ''the difference in US dominance in world trade between those years has been not nearly as great as between 1950 and 1984. We are in global competition in so many areas -- and soon will be in most.''
Economist Robert W. Crandall, a fellow at the Washington-based Brookings Institution, makes the point that while globalism has increased -- especially in areas such as the steel industry -- not all American industries face global competition.
Only where appropriate, he says, should antitrust take into account the international nature of a market.
The most significant consideration today, says Timothy Muris, head of the FTC's bureau of competition, is how easy it is to enter an industry.
''With airlines, for instance, there may be only one or two firms flying between Washington, D.C., and Columbus, Ohio, but that is no problem because it is so easy to enter the airline business,'' he says.
A voice from the Carter White House, Stuart Eizenstat (former-President Carter's White House domestic policy adviser) recently told antitrust lawyers that the US should establish ''a lower threshold for mergers in distressed US industries -- where there is a commitment to reinvestment, capacity rationalization, and a reduction in import barriers.''
This, Mr. Eizenstat says, ''would be a more distinctively American response to the problem of declining basic industries infecting almost every developed industrial democracy.''
''All across the political scale,'' says FTC official Timothy Muris, ''everybody is agreeing that you've got to look at mergers in the light of economics. It's been a gradual change, but the net result has made a dramatic difference.''