Beyond the Cynical Answer

My brother asked me yesterday how the US antitrust authorities could ever have allowed Exxon and Mobil to merge. Don't we still even have antitrust laws?

There was a time (the late 1970s and early 1980s, to be precise) when I was very well versed on those laws and on then-current trends in their application. I wrote a casenote for my school's law review on an antitrust enforcement action involving physicians' fees. In my final year at law school I interviewed with a Justice Department official about a job at in their antitrust division. So it wasn't too odd for my brother to think I'd have an informed opinion on the subject.

But my life and the directions of my thinking have gone in very different directions, and I had no idea how to answer the question.

I do know that according to standard operating procedure, any significant merger involving two firms in the same industry will be reviewed by either the relevant division of the Justice Department (the ones who didn't give me the job, not that I'm bitter, grrrrr) or by the Federal Trade Commission. I assumed, during our brief diner conversation on this subject yesterday, that some such review took place in one of those institutions or the other in 1999, when the Exxon/Mobil merger was in the offing.

Mind the date: 1999. You can't blame the Bush administration for this one. The only answer that came to mind was the cynical one. Perhaps Exxon and Mobil are just too powerful for any White House, and its attendant Justice Department or FTC, to cross.
I didn't give that answer, though. I hemmed and hawed about how complicated it was.

Politically, the question really is more complicated than the cynical answer will allow. In the midst of the Lewinsky impeachment trial, Clinton really had little to lose by picking a fight with Exxon and Mobil. It would have cheered his political base immensely, and they surely could have used the cheering. It wouldn't have angered anyone who wasn't already furiously against him.

Institutionally, too, the question is tangled. The career civil servants who would have had to pass on the subject in one of the afore-mentioned agencies would have been, I'm confident, unlikely to act in any crudely corrupt manner. They didn't go around with Exxon's thousand-dollar-bills sticking out of their pockets while working on their assessments. I'm pretty sure we would have heard about it if they had.

So what DID happen? The Exxon/Mobil merger put together again roughly the Standard Oil trust that Teddy Roosevelt had shattered in the heroic early days of antitrust law. This makes it a puzzle on a psychological level: didn't that matter to anyone?

So when I had a chance I went to a computer and did some research. It was the FTC, not the Justice Dept., that drew the short straw on this one. And these are the reasons they gave for allowing the merger:

http://www.ftc.gov/opa/1999/11/exxonmobil.shtm