Word: antitrusters
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...speed, power and reliability, later became something of a symbol himself when he was chosen in 1934 to help F.D.R.'s Secretary of the Interior Harold Ickes stabilize the industry's chaotic oil prices by pool-buying arrangements-only to find himself and other oilmen convicted on antitrust charges four years later when the Government decided they'd gone too far; of a stroke; in Summit...
These days the Government seldom loses an antitrust case in the Supreme Court. And last week the trustbusters won big. In a unanimous decision, the court agreed with the Federal Trade Commission's contention that the ten year-old Procter & Gamble-Clorox Chemical merger violated the Clayton Antitrust Act and should be dissolved...
...understandably disappointed, and so was the rest of the business community. Noting that the P. & G.-Clorox link seemed neither vertical (between suppliers and customers) nor horizontal (between competitors), businessmen had hoped that either way the decision went, it would mark the first clear-cut application of antitrust law to a conglomerate merger (between companies in unrelated fields). And court-devised guidelines were anxiously awaited, for conglomerate unions today account for 70% of mergers...
Until those standards are laid down, though, Douglas' vague decision allows both Justice and the FTC time and latitude to study the snowballing conglomerate phenomenon. Clearly the court has not ordered a wholesale trustbusting attack. Nor has it gone out of its way to deter the application of antitrust law to conglomerate mergers...
Sophisticated Dangers. Plaguing Turner even more than the sheer volume of mergers, though, is the changing nature of such activity. Once, most corporate marriages were either vertical (between suppliers and customers) or horizontal (between competitors). The Sherman and Clayton antitrust acts defined the terms for such mergers, and the Supreme Court interpreted the definitions in their strictest sense. Laws and precedent are much murkier regarding the "conglomerate" unions that now account for 70% of merger activity...