The Antitrust Farce

When is a crime not officially a crime? Simple: When the laws against that activity are not enforced. Antitrust laws--those almost mythical beings so revered by populists--have been on the books for several generations and are supposed to be used to prevent the kind of concentration of market power that leads to price-fixing and the death of competition. That's what the Archer Daniels Midland case was all about. That's why the Federal Trade Commission used the antitrust laws to block Rite Aid's proposed $1.8 billion purchase of Revco, a combination that would have created the nation's largest drugstore chain. Antitrust laws were used (in addition to the instances previously cited in this article) to pry fines from Reader's Digest ($40 million) and U.S. Healthcare ($1.2 million).

But don't be misled. If the antitrust laws aren't dead, they're showing few vital signs. Concentrations of market power are coming on like a flood, and little is being done to stop the trend. In its yearly wrap-up, under the headline "Gorillas in Our Midst: Megadeals Smash Records as Firms Take Advantage of Favorable Climate," the Journal noted happily that "mergers, acquisitions and spinoffs totalled $659 billion in 1996, up 27 percent from $519 billion in 1995." The outlook was "as good as it gets," because "looser regulation is changing the competitive landscapes in telecommunications, utilities and broadcast, among other industries"--meaning government cops at the Justice Department and the Federal Trade Commission have all but surrendered.

Nowhere was this clearer than in the aerospace and military industry, where, in one of the largest mergers in U.S. history, Boeing bought McDonnell Douglas to become the only--yes, only--manufacturer of commercial jets in the United States, catapulting it ahead of Lockheed Martin, the number-one military contractor, as the world's largest aerospace company. This pairing-off received the same enthusiastic government support that a series of multibillion-dollar military industry mergers have received from the Clinton Administration over the past four years.

Other industries have been promised the same support. Last June the F.T.C. proposed that antitrust enforcers let cost savings justify mergers that would otherwise be considered illegal because they were anticompetitive. What's more, the commission adopted new rules that would speed mergers and acquisitions by radically shortening the time the F.T.C. takes to consider cases alleging anticompetitive conduct or consumer fraud.

Among those benefiting from the new atmosphere, the Journal predicted, would be airlines. Their unauthorized meetings with foreign carriers to fix prices, which violates current antitrust laws, "will soon be routine--with the full approval of the U.S. government."

Crime marches on.

Sidebar: Taking a Flier With Social Security

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