Word: ftc
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...Newmont Mining. The Federal Trade Commission ruled in 1971 that Kennecott's Peabody purchase violated antitrust rules barring concentration in any given industry, arguing that the company could have entered the coal business by investing its own capital. After a five-year rear-guard battle against the FTC ruling in the courts, Kennecott's board, which includes such powers as John Schiff, chairman of the investment banking firm of Kuhn Loeb & Co., and Walter Page, president of Morgan Guaranty Trust, finally lopped off the coal business. Then it began considering ways to use the resulting billion-dollar bonanza...
...Carter Administration reportedly considered naming Pitofsky to head the Federal Trade Commission but then counted him out, perhaps, says a colleague, because of his "professorial air." Though undeniably a professor-he teaches antitrust and consumer law-Pitofsky is certainly no stranger to the FTC, having served from 1970 to 1972 as chief of its Bureau of Consumer Protection. As a teacher, Pitofsky favors the adversary system. Assigning a pair of students to each side of a lawsuit, Pitofsky gives them 30 days to prepare their arguments and then grills them on the law. Law students, says Pitofsky...
Given these gloomy alternatives, it is little wonder that Kennecott badly wants to keep Peabody. But that is prevented by a narrow reading by the FTC and the courts of a much debated section of antitrust law; this is the concept that mergers can be stopped not because they reduce competition but because they eliminate "potential" sources of competition. Back in the mid-1960s Kennecott decided that it would make a major attempt to diversify out of copper. Among other things, it bought a small coal field for the purpose, according to Kennecott, of assuring its own fuel supplies...
...FTC also feared that Kennecott's purchase of Peabody marked a trend toward competition-crushing bigness in the coal business. But Peabody's share of total U.S. coal output has remained steady: about 12%. Meanwhile, since 1968, the proportional market share of the eight biggest coal companies has fallen from approximately 41% to 37%, while the share for the 50 biggest companies dropped from 69% to 66%-figures that suggest that the coal business in the U.S. has become less concentrated and more competitive in recent years...
...with Peabody. Indeed, Wall Streeters give the copper company high marks for its prescience in getting into the coal industry ahead of everyone else. Yet that obviously was a mistake on Kennecott's part too. No other big purchaser of a coal company has been bothered by the FTC, even though some might provide clearer examples of potential antitrust violations than Kennecott. In other words, the FTC ruling, despite its success in court, has not been followed as a precedent, even by the FTC itself-though that hardly helps Kennecott...