William & Mary Law Review


David W. Barnes


Robert Bork, former judge for the District of Columbia Circuit and antitrust scholar, has characterized the social and political goals underlying merger law as "pure intellectual mush."' Social and political values have formed the foundation of the most famous United States Supreme Court decisions interpreting section 7 of the Clayton Act, the primary statutory standard for judging the legality of corporate acquisitions. Judge Bork's dismissive and derogatory comments challenge both judges and scholars to provide a rigorous intellectual foundation and a procedure for incorporating these values into the merger law enforcement process.

Current trends in antitrust policy also force decision makers to confront directly whether anything is wrong with mergers other than the potential increase in market power associated with one firm's acquisition of stock or assets of another. The statutory standards in the Clayton Act for judging the legality of mergers have not been amended since 1950, but courts have differed widely in their application of those standards-from the per se, populist approach of the Warren Court to the rule-of-reason, economic efficiency approach of the Burger Court. In the past, proposed amendments to the Clayton Act have recommended prohibiting all mergers between large firms on the grounds that bigness is bad for social and political reasons. The current trend, however, is toward enforcement and statutory amendments based on economic theories that would permit mergers regardless of the size of the firms involved if the merger would not lead to an excessive increase in market power. The proposed Merger Modernization Act of 1986, reintroduced as part of the omnibus "competitiveness" package of the Reagan administration in 1987 would, by statutory amendment, eliminate from consideration in merger cases all concerns other than those associated with market power. It is important, then, to appreciate the nature or character of those social and political goals not served by an exclusively economic orientation. This focus is likely to continue during the Bush administration.

This Article focuses attention on goals other than economic efficiency by contrasting them to economic goals both in terms of their substantive content and their underlying assumptions. Alternative articulations of the nonefficiency goals are examined to state as precisely as possible what legislators, judges, and scholars had in mind when advocating these goals. Although one can easily appreciate the political and social values scholars and policy makers espouse, it is difficult to identify from the current literature in this area either the connection between mergers generally and undesirable consequences or those particular mergers most likely to have unwanted side effects. Although this Article calls for greater specificity and precision by proponents of nonefficiency goals, it also argues that many of these goals can be included systematically in antitrust enforcement. In response to the appeal of social and political values and their established place in antitrust cases, this Article suggests a more dynamic and democratic interpretation of economic efficiency that incorporates a broader spectrum of values.