Merger Frenzy Pushes Federal Regulators To The Brink

This year’s wave of corporate mergers and takeovers, such as the huge Chemical and Chase Manhattan bank merger announced Monday, has federal regulators scurrying to stay ahead of the game.

“We are stretched to the limit. We are keeping up, but it is a strain,” Larry Fullerton, deputy assistant attorney general for antitrust issues, said Monday. “We’ve just been extraordinarily busy.”

By one measure, the merger caseload for the government’s main antitrust watchdogs, the Department of Justice and the Federal Trade Commission, is up nearly 20 percent this year.

Corporate marriages announced this year include leaders in technology, IBM Corp. and Lotus Development Corp.; in entertainment, The Walt Disney Co. and Capital Cities-ABC Inc.; and in drugs, Glaxo PLC and Wellcome PLC.

The latest is the wedding of Chemical Banking Corp. and Chase Manhattan, which will create the nation’s largest banking company.

A major force driving mergers is a desire of corporate chieftains to improve their competitive positions by linking with a business that offers complementary skills or a strategic advantage in a related market.

Fullerton said these “strategic mergers” of companies in similar industries are more complex than traditional combinations of firms that are in identical businesses, such as a merger of two auto part-makers. Such complexity makes it more difficult to determine if the newly merged business will excessively dominate its field, he said.

An example of a complex merger is last year’s $12.6 billion combination of AT&T Corp., the nation’s biggest long-distance provider, and McCaw Cellular, the largest cellular telephone company. The Justice Department conducted 50 interviews, took 21 depositions and combed through hundreds of boxes of documents in reviewing possible anti-competitive effects of the deal, said Anne K. Bingaman, assistant attorney general.

Cases such as this kept Justice Department attorneys working well into the night, recalls one of Bingaman’s former aides, Steven Sunshine.

“People were working really hard. You would walk around the office at 10 p.m. at night and it would be filled with people,” said Sunshine, now a partner with the law firm Shearman and Sterling in Washington.

“I think the merger load at the agencies is probably higher now than it’s ever been,” Sunshine said.

Both Justice and the Federal Trade Commission have had to review an estimated 2,700 merger deals in fiscal 1995, which began Oct. 1, up from 2,300 in 1994, said Fullerton.