Reagan faces a fight on his plan to ease antitrust law long-range
President Reagan is not one to stand on tradition, especially when it comes to economic policy. Now he is trying to throw off the century-old approach to antitrust and, in its place, establish a more benign attitude toward big business.
In the next couple of weeks, the White House will propose legislation to make it tougher to block mergers, especially in industries that are hurt by foreign competition. Among other things, the Reagan administration would like to do away with the treble damage provision in some antitrust suits.
No one underestimates the Reagan administration's ability to push legislation it favors. But opposition to the liberal antitrust enforcement that exists today has been growing.
So a more permissive policy could meet considerable resistance.
Sen. Howard Metzenbaum (D) of Ohio introduced a bill this week to strengthen antitrust enforcement and counter Mr. Reagan's proposal. Senator Metzenbaum charges that the Reagan administration would like to ``turn the clock backwards'' by codifying permissive antitrust policy.
Besides Metzenbaum, who serves on the Senate Judiciary Committee, other influential opponents on Capitol Hill like Rep. Peter Rodino (D) of New Jersey, who chairs the House Judiciary Committee, are calling for stricter antitrust enforcement by the Justice Department.
The House recently passed a nonbinding resolution criticizing certain Justice Department antitrust guidelines, such as in the relationship between manufacturers and distributors.
State attorneys general have also voiced their dismay: Last month the National Association of Attorneys General issued its own, tougher guidelines on enforcing antitrust laws concerning restraint of trade.
The courts and the public, too, seem to be increasingly irked by the stampede of mergers that Justice Department policy has allowed.
Recent examples include the Houston jury that assessed $10.5 billion in damages to Texaco last year in its dispute with Pennzoil, a series of court decisions that appear to set back the activities of corporate raiders, and a new antitakeover law in New York State.
But in other ways, the timing of the White House push is right.
Scurrying to bolster declining industries and stave off the erosion of strong ones, Congress under this administration has passed laws to allow companies to cooperate in research and development and to promote exports. Another law protects city governments from liability in antitrust suits.
These three ``narrowly focused'' laws, says Douglas Ginsburg, who heads the Justice Department's antitrust division, show Congress's ``open-mindedness'' to reforming the law.
``The climate [for revising the antitrust law] has never been better,'' he says.
``The case for reform has become stronger with each year as our understanding [of economics] progresses. And the urgency of reform has probably never been greater, in light of the problems afflicting the United States in terms of trade, productivity, and innovation.''
The $140 billion-plus trade deficit is a catalyst, since it has sent politicians searching for ways to increase US competitiveness on world markets.
Commerce Secretary Malcolm Baldrige has long argued that American companies can't match giant competitors in Asia and Western Europe.
Mr. Baldrige says that 70 percent of American products face stiff competition from imports -- a situation very different from 1950, the last time the Clayton Antitrust Act was amended.
Therefore, he contends, US companies should be able to merge, operate, and innovate without always having to look over their shoulders.
But, says Herman Schwartz, a law professor at American University, the trade deficit is ``a phony issue.''
Although the trade deficit is a serious problem, he says, ``the question is, are we actually dealing with it directly -- namely, [by increasing] American productivity and competitiveness, or are we simply using the problem as an excuse to do something that the Commerce Department and its business friends have always wanted to do, which is to cut back the antitrust law?''
Senator Metzenbaum agrees that ``antitrust has nothing to do with trade deficits. Trade deficits have gotten worse as antitrust enforcement has fallen off.''
What worries scholars is not so much the permissive guidelines being followed by this Justice Department. The US has always had ``spasms of antitrust enforcement,'' Mr. Schwartz says.
These reflect the views of the heads of the antitrust division more than which political party is in power.
Rather, what concerns opponents of the President's proposal is that it takes away the option for future Justice Departments to enforce the law as the business climate requires.
It is a fundamental shift that should not be taken lightly, they say.
Ever since the Sherman Act was passed in 1890, ``the theory has been that if we control mergers, we create better competition and prices,'' says a business professor at Purdue University. ``There needs to be much more investigation before we pass a law that changes our entire theory of competition.''