The New York herald., 1922-07-22
BIG STEEL MERGERS
FAIR TO DAUGHERTY
Attorney-General Unable to
See Any Violation Of Anti
Trust Acts.
REPLIES TO THE SENATE
Views New Combination as an
Aid to Trade, Not q
Restraint.
TO THE SENATE

Washington. ID. C., July II.
Attorney General Daugherty to-day
informed the Senate that he aid not
consider the proposed mergers between
the Bethlehem and Lacxawanna Steel
companies on the one hand and be-
companies on the other as violation
OF the Sherman, Clayton or Webb anti
trust act. MIR. Daugherty declined to
state whether they violate the Federal
Trade Act.
The Attorney Generals opinion was
In response to Senate resolution which
requested him and the Federal Trade
Commission to furnish information re-
garding the legality Of the merger
plans.
II am unable to f,nd," said Mr.. Daugh-
erty. "in the exhaustive investigation
have made any reasonable warrant for
asserting that the public will suffer II
this combination goes through. The
mergers now under consideration will be
neither an actual monopoly nor even an
attempt to monopolize."
Mr.. Daugherty pointed out that the
Sherman, Clayton and Webb ANTITRUST
acts were passed to prevent corporations
from combining for tho purpose OF sitting
competition and upholding these prices
as a result of monopolizing the markets.
Instead Of being in restraint Of trade"
said the Attorney General. "the new
combination will be In furtherance Of
trade. It's formation has. believe, beer
In q great measure prompted by tho
heavy losses which all of these COM
panies sustained following the marked
depression in the steel industry which
began a year ago.
Production Cheapened.
These losses, aggregating many mill
ions Of dollars, have naturally induced
these companies to devise methods OF
cheapening the production. sale and dis
tribution Of their products BY owning
the plants that are widely scattered,
where production can take place in ac-
cordance with the needs of the commu-
nifty lying close to the plants, by manu-
featuring products at plants advan-
tageously located to ore supplies, by re-
duction Of overhead expenses ard by
eliminating unnecessary sales agencies
substantial economics can be effected.
The combination being formed for this
sole purpose, am unable to see wherein
it is tainted with illegality."
Mr.. Daugherty holds that not every
contractor combination in restraint of
trade is prohibited by the antitrust
laws.
combinations and contracts In unreason-
able restraint Of trade. The motive
which prompts the Bethlehem company
to acquire the Lackawanna, the decision
holds. Is solely the desire to secure
greater efficiency and economy In pro-
duction, &C." ,.l
The Attorney-G General held that the
merger Of the Midvale. Republic and
Inland companies was for but one pur-
pose---te enable the new company to
compete with the United States Steel
Corporation which, because Of the wide
distribution OF its various plants and
their easy accessibility to the sources
OF raw materials. Is enabled to produce
and sell its products much cheaper than
other manufacturers.
The Federal Trade Commission. which
was also requested to pass on the legal
| phase OF the merger, Is expected to
comply with the Senate request within
short time.
The bethlehem Case.
| In holding that the Bethlehem merger
| is not a violation Of the act Of April
| 10, 1918, commonly called the Webb act
Mr.. Daugherty says:
These companies are members Of an
association formed pursuant to the
authority granted by this act to handle
export trade. 1t Is obvious from what
have already said that this act will In
no wise be violated IL this merger goes
! through"
| Dealing with the question whether the
Midvale -Republic-Inland merger violates
the Sherman act, Mr.. Daugherty says:
II see nothing In the proposed merger
that offends this act In my opinion
there Is not the slightest ground for sup
posing that 1t will result in any re-
straint Of trade or monopolistic control
The plants OF these companies are widely
scattered and my investigation leads tc
but one conclusion, and that Is that
the underlying purpose of this COM
bination is not to acquire monopoly
or TO restrain trade, but to enable the
new company more effectually to COM
pete with the United States Steel Cor.
poration, which because Of the wide dis
| tribution of its various plants and their
easy accessibility to the sources Of raw
materials, Is enabled TO produce and sell
manufacturers"
| The opinion also holds that the Beth
Iehem merger Ia not q violation OF the
Clayton act. II Is pointed out that
section makes II illegal for one cor
poration to acquire the stock Of another
corporation engaged in interstate com
merce, where the effect may be to lessen
substantially competition between them
or to restrain commerce or to create q
monopoly.
Here, also, am constrained TO the
conclusion that II will not" says Mr..
Daugherty in answering the question
whether this merger would violate the
Clayton act. But different considera-
tons in part apply. That act makes II
illegal for one corporation engaged In
Interstate commerce to acquire the stock
or other share capital of another cor.
poration engaged nlso in such commercs
where the effect OF such acquisition may
be substantially to lessen competition
! between them or 10 restrain commercs
create a monopoly Of any line OF com
merce. 1t Is obvious that the acouisi
ton OF the stock Of one company b,
another Is not prohibited where all tha
takes place Is a mere iessening OF oonpe
tition. The act dcnouncss the acquisi
ton only where the effect may be sub
stant1ally to lessen competition betweel
the companies.
II have set forth with considerable
detail the extent Of the competition ex
listing between the two companies men
TONED. In my opinion the facts are no
such as to bring the proposed merge
within the prohibition or the Clayton act
This conclusion rend ers 1t unneces
sary for me to consider another question
the solution of which is attended wit
no little difficulty. and that Is whethe
the proposed merger would fall withii
this act II it's effect were to substantial.
lessen competition. AS we have Jus