March 4, 1996
"Rhetoric Meets Corporate Reality"
San Jose Mercury News
By Timothy Taylor
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ON THE campaign trail back in 1992, Bill Clinton made hay by railing against that decade of greed, the 1980s. Exhibit A in his complaints was how the Republicans had aided and abetted a tidal wave of corporate mergers and acquisitions. When the Democrats took over, it was implied, things would be different.

After the election, Clinton appointed Ann Bingamon, a lawyer with an activist reputation, as the head of the antitrust efforts in the Department of Justice. A front-page story in the Wall Street Journal back in 1993 made her sound like the Arnold Schwarzenegger of trustbusters. The Journal wrote:

"Ann Bingamon has a blunt message for corporate America: The antitrust cops are back on the beat. Don't ask for exemptions and don't try to sway her with fancy arguments about the global economy... Bingamon promises 'vigorous' antitrust enforcement, and she has moved quickly to show she means it."

Clinton's antitrust forces have pursued a few high-profile cases, like discouraging Microsoft from buying up some of its competitors. But on the way to the crusade, a strange thing happened to these antitrust cops; they have just presided over the largest wave of corporate mergers and acquisitions in U.S. history.

The merger boom of the mid-1980s peaked in 1989 with $316 billion in deals, before declining to only $125 billion in 1992, the last year of Bush's presidency. Since Clinton's election the boom has returned. Last year saw an all-time high of $356 billion worth of mergers and acquisitions.

If the merger wave of the late 1980s proved that the Republicans presided over a decade of greed, what does one call the merger record of the Democrats during the Clinton administration? Greed-plus?

Actually, this is nothing more than a case of pragmatism catching up to campaign rhetoric. Mainstream economic thinking has shifted over the last few decades, so that mergers are now viewed as more likely to offer benefits, and less likely to cause injury.

Nowadays, it would be hard to find an economist who would refer to antitrust policy as one of America's advantages over international competitors. Instead, there is more concern that government-supported industrial conglomerates in Japan or certain European nations have an unfair advantage in global markets.

It would also be difficult to find a current economist who believes that discouraging monopoly behavior during economic upturns will make a great difference in achieving price stability. The current belief is that the Federal Reserve has the responsibility of stopping the economy from spinning into an inflationary cycle.

But back in the early 1960s, these concerns were so strong that various Supreme Court decisions encouraged the government to block even mergers between small competitors, who together would hold less than 10 percent of the market, on the grounds that if many, many additional mergers were to occur later, then problems of reduced competition would arise.

Sometimes industries need shaking up, and mergers and acquisitions and sell-offs and spin-offs are how a market economy reshuffles the deck. Spending cutbacks led to a need for defense industry downsizing and mergers. Cost containment pressures have spawned health care mergers. A combination of new laws and technological opportunities are reshaping the telecommunications and financial services industries.

In addition, many economists now argue that antitrust laws should be relaxed to allow industries to pool their research and development or to meet the thrust of foreign competition.

Of course, these arguments for why mergers are often necessary and even beneficial were equally true during the 1992 campaign. Bill Clinton's antitrust policy has been every bit as sensible as the Republicans policies that he criticized so fiercely four years ago.

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