Is America’s Merger Fever Breaking?
The US Justice Department and Federal Trade Commission’s new merger guidelines represent a radical departure from the neoliberal assumptions that have long underpinned US antitrust enforcement. By directing agencies to focus on market structure and power, the guidelines could stop runaway consolidation and help preserve US democracy.
WASHINGTON, DC – In the summer of 1982, the United States government sent corporate America a love letter. President Ronald Reagan’s top antitrust official, William Baxter, who made no secret of his desire to use his position to assist the country’s largest companies, issued the Justice Department’s new merger guidelines, instructing staff how to determine whether a merger violated antitrust laws and should be blocked. Baxter’s new rules made it clear to big business that federal agencies would no longer limit their ability to amass power. An era of nearly unrestricted corporate consolidation followed.
The 1982 merger guidelines were akin to a coup. Reagan officials were eager to gut America’s robust antitrust laws but knew they could not persuade Congress to do so. By issuing a set of guidelines that purported to interpret the law, they effectively rewrote it. The 1950 Anti-Merger Act directed antitrust agencies and the courts to block any merger that “may” substantially reduce competition. Alarmed by the role that monopolies had played in the rise of German fascism, legislators sought to safeguard US democracy from the corrosive effects of economic concentration. But Baxter set this law aside and issued guidelines that welcomed consolidation, declaring that “mergers generally play an important role in a free enterprise economy.”
The ploy worked. Judges began to rely on the guidelines more than the actual statutes, greenlighting numerous problematic corporate mergers and making it increasingly difficult for regulators to curtail monopolistic abuses. Instead of challenging this subversion of antitrust laws, Democratic administrations embraced the bigger-is-better neoliberal logic and even took it further. The most recent revision to the merger guidelines, implemented under President Barack Obama in 2010, raised the thresholds for market concentration, thereby enabling an even wider range of mergers to escape scrutiny.
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