The tough talk could still help to shield the President at the voting booth from a backlash against the wave of corporate scandals this November. But in Washington, Bush may be Corporate America's best friend. Case in point: his emerging policy toward mergers, which is shaping up as unapologetically probusiness.
CHARTING A NEW COURSE. While this may come as no surprise to those who followed the Administration's settlement of the antitrust case against Microsoft (some state attorneys general will never accept it), it was Bush who entered office last year promising a merger policy of "continuity" with the Clinton Administration.
That's not the direction the President seems to be headed anymore. Consider the bids by the country's two biggest cruise lines, Carnival and Royal Caribbean, to buy the only other significant player, P&O Princess Cruises. Career lawyers in the Federal Trade Commission's New York office urged against allowing either merger offer to go through, sources tell BusinessWeek Online. But on Sept. 11, the FTC's antitrust chief in Washington, Joseph J. Simons, a political appointee of Chairman Timothy J. Muris, recommended that the bids be allowed to proceed.
Then there's the proposed union of satellite broadcasters EchoStar and GM's Hughes Electronics. While FTC decisions on these deals are pending, antitrust experts believe both would have been quickly rejected in years past, regardless of which party held the White House. The satellite merger is less likely to happen than a cruise-ship combo, in part because a bipartisan coalition of state attorneys general oppose it. But the Justice Dept. refuses to dismiss the offer out of hand, saying more time is needed to hear out the bidder.
THREE'S COMPANY. Both Democrats and Republicans have approved plenty of mergers as consolidation has swept through industry after industry over the last two decades. What's different here? Both parties have stood behind a longstanding taboo against allowing an industry of three players to shrink to a duopoly -- something that would result if either the satellite merger or a cruise-line deal wins FTC backing.
The Clinton Administration nixed the merger of H.J. Heinz and Beech-Nut, two also-rans to Gerber Products in baby food. And even the probusiness Reagan Administration iced a proposed Coke-Dr Pepper mixture. The rationale, says University of Baltimore law professor Robert H. Lande: "Invariably you're going see higher prices and fewer choices."
So why are the Bushies willing to examine these proposals so closely? In EchoStar's case, they're listening to proponents who claim a merger would put satellite broadcasting on a more even footing to compete with cable. And the two cruise-ship suitors are telling the FTC that large hotels offer competition aplenty. They also say prices will be kept down by "yield management" -- selling cabins more cheaply as the departure date nears.
WHERE WILL IT END? If either of these mergers is approved, say antitrust experts, Katy, bar the door. Soon, a host of other companies will be lining up outside the FTC, making similar requests. Airlines could cite their use of yield management to justify further consolidation, says David Balto, an attorney with White & Case. "United-U.S Air, Delta-Northwest -- you name it," says Balto.
And if hotels are viewed as competition for cruise ships, then businesses in other concentrated industries could try to justify corporate marriages by conjuring up new competitors. Movie makers, for instance, could say they compete for people's leisure dollars with restaurants, book publishers, theme parks, crossword-puzzle publishers, Little League sports -- just about anything that might conceivably represent an alternative to going to the movies.
Far-fetched? Maybe not. Bush's trustbusters appear to be receptive to making a major policy change. If the President is comfortable with that, he may go down in history as one of Big Business' biggest buddies. Carney covers legal affairs for the Washington bureau of BusinessWeek