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Editorial

A Growing Free-for-All

By approving the merger between AT&T and BellSouth unconditionally, the Bush administration has again abdicated responsibility for protecting consumers when huge companies combine.

Fierce competition between private companies is at the core of the nation’s economic strength. But government still has an important role to play as referee, making sure that the rough-and-tumble game of capitalism doesn’t become perversely uncompetitive through significant concentrations of market power in the hands of a few companies.

From the very start, the Bush administration’s approach to antitrust and merger policy has been much more hands-off than its predecessors’. In an era of rapid consolidation and deregulation, the Justice Department hasn’t brought a single major monopoly case under the Sherman Antitrust Act since the Clinton administration went after Microsoft for illegally defending its monopoly for the Windows operating system. The department settled that case during President Bush’s first year in office.

That set the tone for a merger policy that often appears to be little more than “anything goes.” One gets the impression at times that the referee has left the playing field.

Perhaps the clearest example came earlier this year when the department cleared Whirlpool’s $1.7 billion acquisition of Maytag, which gave the combined company up to three-quarters of the market for some home appliances. As Stephen Labaton reported in The Times shortly thereafter, that decision actually demoralized career officials in the department’s antitrust division.

Not only has the government failed to bring many significant cases, it is opposing one brought and won by a third party. The Supreme Court will hear a case in which a jury found that Weyerhaeuser monopolized a market for logs in the Pacific Northwest. The Bush administration filed a brief asking the court to reverse the decision, already upheld on appeal.

A federal district judge is reviewing the antitrust settlements that previously allowed SBC Communications to acquire AT&T and Verizon to buy MCI. But by approving the AT&T-BellSouth merger without a single condition, the Justice Department has allowed this one to avoid judicial review.

That leaves the Federal Communications Commission. The commission has scheduled a meeting to discuss the merger today. It should take a long, hard look at the deal, and the overall trend toward consolidation in the telecommunications industry. There are strong arguments that competition with cable companies and Internet phone services have changed the playing field. But the commissioners should pursue the question thoroughly rather than wielding a rubber stamp as the Justice Department sometimes appears to. They must think first about protecting consumers, while bearing in mind that bigger is not always better.

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