Mergers Hit Record Level During 1996 Total Number Of Transactions Was More Than Double ‘91 Pace

The number of U.S. mergers and acquisitions increased to record levels in the past 18 months, according to a Federal Trade Commission official.

Companies sought federal approval for 3,087 transactions in fiscal year 1996, more than double the number in 1991 and the fifth straight yearly increase, said William J. Baer, director of the FTC’s Bureau of Competition. The number of filings increased by another 14 percent in the first six months of the current fiscal year, he said.

The increased merger activity hasn’t necessarily meant tougher scrutiny by federal trustbusters. Although the FTC and its antitrust review partner, the U.S. Justice Department, challenged more transactions in recent years, the number of FTC enforcement actions dropped last year, Baer said.

Commenting on the higher number of challenges, Baer said the agency’s standards haven’t changed but the FTC is applying those standards “with greater confidence” that the consumer will benefit.

“We are challenging more mergers in the mid-‘90s than we did in the ‘80s, but this does not reflect a paradigm shift in merger analysis,” Baer told the antitrust section of the American Bar Association in Washington.

The numbers released by the FTC suggest a request for more information about a merger should be regarded as a warning sign. In two-thirds of cases in which the FTC issued so-called “second requests” last year, the agency eventually took action either to block or to revise the transaction. In 1995, 60 percent of second requests led to enforcement actions.

Baer said the FTC increasingly was targeting its second requests. “We were able to use the second request process more efficiently by limiting its use to the transactions most likely to raise serious concerns,” Baer said.

Of the 24 FTC enforcement actions in 1996, 21 were settlements with the companies. In three cases, the FTC asked a federal judge to issue a preliminary injunction blocking the transaction.

The FTC currently is considering a number of big transactions, including Boeing Co.’s planned acquisition of McDonnell Douglas Corp.