WASHINGTON — All 50 state attorneys general, in sharp contrast to Reagan Administration policy, have unanimously adopted tougher guidelines against business mergers and acquisitions, spokesmen for the officials announced Tuesday.
"In recent years, the lack of firm, consistent federal antitrust enforcement has created a confusing and dangerous situation," said California Atty. Gen. John Van de Kamp, whose office was instrumental in drawing up the guidelines. "As large and small firms merge at an alarming rate, too often the result is less competition, higher prices and higher unemployment."
The National Assn. of Attorneys General, representing the attorneys general of all the states as well as those of the five U.S. territories, approved the guidelines, which narrow conditions that they find acceptable for mergers, at this week's spring meeting here.
Frustrated by the Justice Department's approval of billion-dollar industry consolidations, the officials--both Democrats and Republicans--told a news conference that the new guidelines will give businesses the message that states are united in their determination to stem a "rash of mega-mergers." The officials said that they will reiterate that message today in testimony before a Senate subcommittee that deals with antitrust matters.
States May File Suit
Under federal law, the federal government has the authority to review business acquisitions and mergers to determine whether they would illegally restrain trade or violate other antitrust provisions. However, states, through their attorneys general, have the right to file suit to block such a deal if they believe it harms their consumers.
The new standards, called Horizontal Merger Guidelines, outline when such suits would be filed, with the intention of spurring businesses and federal officials to comply with the guidelines in the interest of preventing litigation.
The Justice Department and Federal Trade Commission said that the state guidelines would lead to more confusion for businesses.
The standards would allow few direct competitors to merge, especially in areas where there are a limited number of companies competing. They would also challenge mergers of companies that already control a large share of the market.
Hard Evidence Wanted
The guidelines would:
--Require hard evidence, such as sales figures and data on buying patterns, showing that consumers would still have a choice of products or could buy them at a competitive price elsewhere after a merger of competitors was completed. Current Administration guidelines rely too much on abstract economic theory, New York Atty. Gen. Robert Abrams said.
--Allow firms to merge on grounds of increased efficiency only if there is strong evidence that such efficiency will occur and would benefit the consumer.
--Set clear priorities for further review of a merger even if the merged companies do not dominate the market area. Such additional factors would include whether the merger would make it more difficult for new competitors to enter the market.
Leniency on Mergers
The Reagan Administration, with a stated commitment against unnecessary interference with business, has been more lenient in permitting mergers than some previous administrations have been.
Thirteen of the largest mergers in U.S. history have taken place since 1982, when the Reagan Administration announced updated guidelines that expanded the number of acceptable mergers. State attorneys general were particularly alarmed by the Chevron-Gulf and Texaco-Getty oil company mergers in 1984, which totaled $23.3 billion.
The Texaco-Getty merger, approved by the FTC, proceeded despite opposition from 22 state attorneys general. Van de Kamp filed suit to stop the merger of Texaco and Getty assets in California, arguing that the combination would lessen competition. The case is on appeal in the California Supreme Court, but it marked the beginning of state efforts to reduce the number of mergers.
Abrams, who joined Van de Kamp last year in developing the guidelines, said that--although the number of mergers reached record levels in 1986--Justice Department challenges to them have decreased.
Acting Assistant U.S. Atty. Gen. Charles F. Rule said Tuesday that the Justice Department's rules are so clear that they have resulted in fewer antitrust violations or questionable merger proposals.