White House Seeks to Loosen Antitrust Rules
The Bush Administration on Monday unveiled its long-awaited proposal to loosen antitrust laws so that companies can more easily form joint manufacturing ventures.
The proposal is part of the White House’s effort to clear the way for U.S. companies to work together to compete against foreign firms. Several leading electronics firms, for example, have been trying to promote a U.S. joint venture to produce equipment for the emerging high-definition television market now dominated by Japanese and European companies.
“With strong worldwide competition from companies abroad that often receive proactive help from their countries, it is important for us to at least help unfetter our own companies,” said Commerce Secretary Robert A. Mosbacher.
The legislation generally follows a middle-of-the-road approach, proposing to make it more difficult for competitors to challenge joint ventures on antitrust grounds and to limit any legal awards to single rather than the current treble damages available to firms injured by antitrust violations.
Administration officials backed away from a more far-reaching plan that would have given blanket protection against antitrust suits to any joint venture that was approved by the federal government.
“This bill accomplishes a balancing of interests,” Atty. Gen. Dick Thornburgh said. “The Justice Department will continue to provide protection to U.S. consumers . . . while at the same time allowing for legitimate cooperative ventures.”
The bill enjoys widespread support among U.S. business groups. But even though it is watered down from what some officials wanted, the legislation could still run into serious challenges on Capitol Hill. Sen. Howard M. Metzenbaum (D-Ohio) has already expressed his intention to oppose any effort to loosen the nation’s antitrust laws.
“This is what we think we can get through Congress,” Mosbacher said. “I’d say our odds are better than 50-50.”
The bill comes at a time when a new study by a well-known Harvard Business School professor questions the basic approach behind the Administration’s bill.
Michael E. Porter, author of a forthcoming book, “The Competitive Advantage of Nations,” argues that efforts to relax antitrust rules could well end up undermining U.S. international competitiveness rather than enhancing it. Porter argues that intense domestic competition fosters stronger U.S. companies.
“While it is fashionable today to call for mergers and alliances in the name of globalization and the creation of national champions, these often undermine the creation of competitive advantage,” Porter wrote.
T. J. Rodgers, president of Cypress Semiconductor in San Jose, echoed Porter’s fears.
“I’ve got enough problems with the unfair tactics of Japanese concerns (without having) Washington make it worse by allowing large U.S. companies to engage in anti-competitive practices,” Rodgers said. “I don’t understand how America will be made more competitive by reducing the penalties for companies convicted of a crime.”
Most business groups, however, quickly lined up behind the Administration’s approach.
“We highly support this type of legislation,” said Jim Carty, a vice president at the National Assn. of Manufacturers. “This is not a guarantee against antitrust suits, but it might help ease the unhelpful suspicion of wrongdoing that prevents many joint ventures from getting off the ground.”
Under current law, companies can enter joint ventures for research and development without generally worrying about violating the antitrust laws. The new proposal would extend similar protection to joint production ventures.
The bill, Mosbacher said, “will help U.S. firms face unprecedented, worldwide challenges by bringing important research from the laboratory to the marketplace efficiently, cost-effectively and with less risk.”
The legislation is also aimed at countering critics who argue the Administration is doing nothing to help U.S. firms compete internationally because of opposition among top White House officials to anything that smacks of government support for favored industries.
While acknowledging that the proposed changes are relatively limited, some Administration officials are hopeful that the legislation will open the way to broader development of a promising new approach to manufacturing--the use of a flexible computer-integrated plant by different firms to produce a wide range of goods.
“Current law doesn’t fit our need for flexibility to compete in the global marketplace,” said an official with Hewlett-Packard Co., the Palo Alto-based electronics firm. “This could help in planning so you don’t have unnecessary duplication, triplication, quadruplication of effort in the manufacturing of important generic products.”
