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FTC rarely blocks mergers
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March 10, 1997: 10:18 p.m. ET
The government has tried to stop only seven mergers since 1995
From Correspondent Katharine Barrett
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NEW YORK (CNNfn) America's merger-machine is picking up steam and is running into relatively few roadblocks.
Federal regulators reviewed about three times the number of mergers last year as five years ago, but are still blocking only a tiny percentage. The Justice Department and Federal Trade Commission have tried to stop just seven mergers since 1995.
"The chances, in essence, are less than one in a thousand," said Steven Sunshine, an antitrust attorney at Shearman & Sterling. "Almost 6,000 mergers a year get filed before the antitrust division in the Federal Trade Commission. Of those in the last couple years, less than a handful have been stopped in their entirety."
Only a few of those mergers were headline deals. On Monday, the FTC rejected a bid by Staples to take over Office Depot. The government also stopped a proposed merger between Rite Aid and Revco drug chains and short-circuited Microsoft's purchase of Intuit. A handful of hospital combinations were blocked as well.
Experts say for the past 15 years or so, the government's strategy has been to fix a merger first and try to compromise, before heading to court.
"An awful lot of negotiation occurs ahead of time, and in the overwhelming number of cases either there is no problem to begin with, or the problem gets settled through negotiation or an agreement that a certain number of stores or branches get sold off," said Professor Lawrence White, an economist at NYU's Stern School.
Regulators say they take a hard line when they feel a merger will cause customers to pay higher prices. But it is more often than not a deal-breaker -- once the approval battle moves from the back room into the courtroom.
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