With his highly appreciated bag of assets, Ling was in a position to offer collateral for bigger loans for bigger acquisitions. Other conglomerators play variations on the same pecuniary theme. Meshulam Riklis, the scholarly chief of Glen Alden, accomplished less spectacular feats by selling convertible debentures, bond-like instruments that can be swapped for common stock. Mergers once posed relatively simple antitrust problems. Legality hinged on whether the mergers would lessen competition in the affected markets-not an easy judgment to make, but conceptually manageable.
Conglomerates raise the issue of political power in a new and disquieting fashion.
Litton, L.T.V., General Dynamics-to name only a few owe their rise to defense contracts and a continuing relationship with the Federal Government. Little light has yet been cast, however, on most of the antitrust issues. Veteran antitrust economists, whose survival in Washington's lobby jungle is a tribute to their courage, argue that conglomerates pose several clear threats to competition, and their contentions are mirrored in recent F.T.C. and Supreme Court decisions. The first threat is from price subsidization-the use of profits, earned in a market where the position of the conglomerate is strong, to drive out the competition in another market by cutting prices below costs and subsequently raising them. If entry into the market is easy, the conglomerate's higher profits will soon attract competition.