WASHINGTON -- Every time you pick up the newspaper you read about one company merging with another company. We have laws to protect competition in the United States, but one can't help thinking that, if the trend continues, the whole country will soon be merged into one large company.

It is 1988 and by this time every company west of the Mississippi will have merged into one giant corporation known as Samson Securities. Every company east of the Mississippi will have merged under an umbrella corporation known as the Delilah Co.

It was inevitable that one day the chairman of the board of Samson and the president of Delilah would meet and discuss merging their two companies.

"If we could get together," the president of Delilah said, "we would be able to finance your projects and you would be able to finance ours."

"Exactly what I was thinking," the chairman of Samson said."Our only chance of survival in this country is to diversify; and if we merged, we wouldn't have to worry about unfair competition. I propose we trade our stock one share for one and set up the Samson and Delilah Corp. Together we'll own the United States."

"That's a great idea and it certainly will make everyone's life less complicated."

The men shook on it and then they sought out approval from the Antitrust Division of the Justice Department.

At first the head of the Antitrust Division indicated that he might have reservations about allowing the only two companies left in the United States to merge.

"Our department," he said, "will take a close look at this proposed merger. It is our job to further competition in private business and industry, and if we allow Samson and Delilah to merge we may be doing the consumer a disservice."

The chairman of Samson protested vigorously that merging with Delilah would not stifle competition but would help it. "The public will be the true beneficiary of this merger," he said. "The larger we are, the more services we can perform, and the lower prices we can charge."

The president of Delilah backed him up. "In the Communist system the people don't have a choice. They buy from the state. In our capitalistic society the people can buy from either the Samson Co. or the Delilah Co."

"But if you merge," someone pointed out, "there will be only one company left in the United States."

"Exactly," said the president of Delilah. "Thank God for the free enterprise system."

The Antitrust Division of the Justice Department studied the merger for months. Finally the Attorney General made his ruling. "While we find some drawbacks to only one company being left in the United States, we feel the advantages to the public far outweigh the disadvantages.

"Therefore, we're making an exception in this case and allowing Samson and Delilah to merge.

"I would also like to announce that the Samson and Delilah Co. is now negotiating at the White House with the President to buy the United States. The Justice Department will naturally study this merger to see if it violates any of our strong anti-trust laws."

The following brief quotations from Attorney General William French Smith and Assistant Attorney General for Antitrust William Baxter cannot do justice to all of their views on this subject. They are, however, both representative and pertinent to Mr. Buchwald's comments in the opposite column.

Some have argued that competition is synonymous with a large number of competitors. Economic reality, however, is more complex. The number of firms in any given industry does not always, without a great deal more information, reveal enough about the nature, quality, or vigor of competition in that industry. In some industries, competition yields a large number of competitors -- in others, only a few -- depending upon the economics of scale, distribution costs, and other factors.

In any industry, however, competition will inexorably result in the elimination of some competitors -- those that are least efficient. That process is, indeed, one of the results and purposes of the competitive process. We must recognize that bigness in business does not necessarily mean badness -- and that success should not be automatically suspect.

The disappearance of some should not be taken as indisputable proof that something is amiss in an industry. In a race, the fastest runner is not penalized by being required to wear fetters around his or her ankles. Similarly, in an economy based upon unfettered competition as the rule of trade, efficient firms should not be hobbled under the guise of antitrust enforcement. The preservation by government of inefficient competitors inevitably leads to economic distortions that will disadvantage the consumer. Although the behavior of firms in industries with relatively few competitors will always deserve the attention of our Antitrust Division, evidence of anticompetitive behavior and of barriers to entry should be carefully analyzed prior to government's intervening in the private competitive process.

We are also rethinking past policies with respect to mergers. Merely classifying mergers as horizontal, vertical, and conglomerate is not talismanic.For antitrust purposes, there is no reason to distinguish between vertical and conglomerate mergers because the key question in analyzing any merger is whether it is likely to have a negative impact upon competition at any horizontal level. In addition, in the past, insufficient attention has been paid to entry conditions in assessing the competitive impact of mergers.

William French Smith

(Annual Meeting of the District of Columbia Bar, June 24, 1981 )

There is nothing written in the sky that says the world would not be a perfectly satisfactory place if there were only 100 companies, provided that each one had 1% of every product and service market. In that case there would be extremely high aggregate concentration and, at the same time, perfect competition. So you see, the two have nothing necessarily to do with one another. Consequently, I certainly do not see a war against aggressive concentration as part of this department's mission.

When there is already a four-firm concentration ratio at or above the 50%-to-60% level, then the disappearance of a significant firm through merger poses antitrust problems.

William Baxter

(Quoted in Dun's Review, August 1981, page 38. )

Copyright $., 1966, Los Angeles Times Syndicate. Reprinted by permission.