We are in the midst of a great debate on conglomerate mergers. While some have warned that the current merger movement poses grave dangers to the structure and vitality of competitive markets, others have defended conglomerate activity as a method if increasing the efficiency and dynamism of corporate enterprise, thereby adding the competitive vigor. Businessmen, economists, lawyers, and government officials are all having their say on this important issue. Out of the contribution each can make to this discussion will emerge, one hopes, a sound public policy towards conglomerate mergers. But development of such a policy requires that we probe beneath the surface of this debate into the core of the underlying facts of the problem. To borrow a phrase from Mr. Justice Homes, it seems to me that at this time we need "investigation of the obscure" more that further "education in the obvious".

What is "obvious"--and disquieting--is the impact of the current merger movement on the structure of the economy. The number and size of conglomerate mergers have substantially increased in recent years; the percentage of industrial assets owned by the largest 200 firms have increased significantly in the last two decades, from about 42% to about 61%; and mergers have contributed substantially to this increase in aggregate concentration.

What is "obscure," however, and in need of further investigation, are the actual competitive consequences of these merger-induced structural changes. We do not yet have the facts necessary to answer the most difficult, but basic, questions regarding the effects of the current merger movement on industrial behavior and performance, and on the structure of particular markets in which conglomerate firms operate. 

Philip Elman

Commissioner

Federal Trade Commission