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Donald Turner’s Merger Guidelines as an Antitrust Watershed

Abstract

The idea of agency-issued guidelines as an effective enforcement tool was novel indeed when Professor Donald F. Turner unveiled it as a priority upon being nominated to be head the Justice Department’s Antitrust Division in 1965. This chapter reviews how Turner and we who were on his team worked to create the Merger Guidelines that were issued on his last day in office in May 1968. It also discusses how Turner’s novel merger guidelines idea has since been widely used in United States and globally.

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Notes

  1. The Von's case, in which the District Court had denied the preliminary injunction request, seemed a odd case for the Government to want to appeal to the Supreme Court.

  2. Informal talk at a conference to celebrate the 50th anniversary of the Philadelphia National Bank (1963) decision at the New York University School of Law on November 15, 2013.

  3. The result was the Bank Merger Act of 1966. (a) This new statute required the three federal bank regulators (Federal Reserve Board, Comptroller of the Currency and the Federal Deposit Insurance Corporation) to apply an antitrust test in reviewing bank mergers and allowed them to participate as a party in the trial and appeal of any Department of Justice challenge to a merger that the agency had approved. (b) The Act created the so-called “convenience and needs” defense, as more flexible alternative the normal “failing company’ defense used in antitrust merger cases. (c) It established a fast track process for both the regulatory agency and the Antitrust Division to review any merger and/or bring an antitrust case. (d) Most importantly, the Act gave the Division a huge tactical advantage by providing a bank merger could not be consummated until any antitrust trial and appeal had completed.

  4. They were also much lower than the 20% market share tests that Kaysen and Turner had in their Antitrust Policy (1959) book quoted above.

  5. This suggests that the substantive tests for horizontal mergers in the final Merger Guidelines may well have been affected by Turner's failure to move the project forward earlier in his tenure as AAG. Ramsay Clark's predecessor as Attorney General (who had brought Turner on board), Nicholas Katzenbach, was not a populist and he remained in office until October 2, 1966. Thus, it seems likely that, if Turner had submitted his Guidelines for final approval prior to that date, higher horizontal merger thresholds would have been accepted by the Attorney General.

  6. Just before being nominated to be AAG, Turner had completed an article on antitrust policy toward conglomerate mergers (Turner 1965).

References

Journal Articles

  • Bok, D. (1960). Section 7 of the Clayton Act the Merging of Law and Economics. Harvard Law Review, 74(2), 226–355.

    Article  Google Scholar 

  • Turner, D. (1965). Conglomerate Mergers and Section 7 of the Clayton Act. Harvard Law Review, 78(5), 1315–1395.

    Google Scholar 

Authored Books

  • Kaysen, C., & Turner, D. (1959). Antitrust policy (pp. 127–141). Cambridge, MA: Harvard University Press.

    Book  Google Scholar 

  • Rowley, J., & Baker, D. (Eds.) (2017). International mergers: The antitrust process. London: Sweet & Maxwell. Section 1.6 of every national chapter discusses the enforcement agency’s merger guidelines.

Telephone Interview

  • Breyer, J. S. J. (2018) interviewed by the author May 24, 2018.

Government Documents

Working Papers

  • Williamson, O. (2002). The Merger Guidelines of the U.S. Department of Justice—In perspective. Retrieved January 10, 2018, from U.S. Department of Justice website: ///E:/Articles%20by%20Others/Williamson%20on%20Merger%20Guidelines…html.

Supreme Court Decisions

  • Brown Shoe. (1962). Brown Shoe Co. v. United States, 370 U.S. 294 (1962).

  • Consolidated Foods. (1965). Federal Trade Commission v. Consolidated Foods Corp., 380 U.S. 592 (1965).

  • El Paso. (1964). United States v. El Paso Natural Gas Co., 376 U.S. 651 (1964).

  • Grinnell. (1966). United States v. Grinnell Corp., 384 U.S. 563 (1966).

  • Marine Bancorporation. (1974). United States v. Marine Bancorporation, Inc., 418 U.S. 602 (1974).

  • Philadelphia National Bank. (1963). United States v. Philadelphia National Bank, 374 U.S. 321 (1963).

  • Proctor & Gamble. (1967). Federal Trade Commission v. Proctor & Gamble Co., 386 U.S. 568 (1967).

  • Schwinn. (1966). United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967).

  • United Shoe (1068). (1968). United States v. United Shoe Machinery Corp. 391 U.S. 244.

  • Von’s Grocery. (1966). United States v. Von’s Grocery Co., 270 (1966).

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Correspondence to Donald I. Baker.

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Baker, D.I. Donald Turner’s Merger Guidelines as an Antitrust Watershed. Rev Ind Organ 53, 435–444 (2018). https://doi.org/10.1007/s11151-018-9662-8

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  • DOI: https://doi.org/10.1007/s11151-018-9662-8

Keywords

  • Market structure
  • Merger policy
  • Market shares
  • Antitrust law