Grassley said he wants the Justice Department to give these considerations substantial weight in its final determinations of merger approval under the federal antitrust laws. Mergers and alliances among larger companies are on the rise in many industries, including the banking, telecommunications, pharmaceutical/chemical, insurance, defense, and airline industries.
Grassley sent his request to Assistant Attorney General Joel Klein, head of the Justice Department's Antitrust Division. Next Tuesday morning, Grassley will participate in a hearing before the Senate Judiciary Committee to consider the trend in mergers and corporate consolidations. Alan Greenspan, Chairman of the Federal Reserve Board and Klein are scheduled to testify, along with representatives from the Council of Economic Advisors and Federal Trade Commission.
Grassley said the antitrust laws "were written to prohibit mergers and acquisitions that reduce competition and harm consumers, including the millions of Americans who live in smaller and rural communities. Consumers and businesses in rural states must not be left out of the equation when considering whether bigger is better," he said.
The federal antitrust laws prohibit practices that restrain trade, including corporate mergers that are likely to lessen competition and predatory behavior by companies that are designed to achieve or maintain monopoly power. Under the Clayton Act, the federal government can investigate and challenge mergers that economic determinations show will reduce competition and increase prices for consumers. All companies considering mergers or acquisitions of a certain size must notify the Justice Department's Antitrust Division and the Federal Trade Commission to undergo this economic review.
Grassley said there are many questions to be asked. Mergers can result in increased efficiencies in corporate resources, expanded shareholder profits, enhanced technological synergies, and stronger competitive market power in a global economy. "But these advantages must be weighed against possible disadvantages to consumers and businesses in rural areas of the country. The Justice Department has a responsibility to make a multi-faceted antitrust analysis. I want to make sure that the federal regulators responsible for making final decisions on these "mega-mergers" are paying particular attention to the impacts on rural America when they conduct their antitrust analyses," he said.