GM-Chrysler Merger Likely Blocked by Antitrust

During the negotiations for the multi-billion dollar bailout being announced today, an option again apparently came up that might have gone a long way toward strengthening General Motors and Chrysler’s viability that wouldn’t have cost taxpayers a dime — a merger between the two of them.

But also once again, the idea was quickly shot down. The companies didn’t give a reason, but more than likely it was the hurdles of antitrust rules. The Detroit News recently quoted an antitrust expert saying that even in their current dire straits, a merger review would take at least a year, and even then it may not pass muster, because of the supposed “dominance” of the combined company of the light truck market.

But artificially dividing the auto industry into this type of market — when the recent oil spike clearly showed the consumers will substitue passenger cars for light trucks — shows how outdated antitrust rules are. Another example of the absurd nature of antitrust rules — in this example, impeding healthy companies creation of more jobs — is the Federal Trade Commission’s ridiculous holdup of the Whole Foods-Wild Oats merger in which the agency’s “market dominance” analysis deliberately exluded competition the combined organic grocer faces from retail giants like Wal-Mart and Safeway. Here is the post I previously wrote about that in Open Market.

So before another dollar of taxpayers’ money is spent by the Bush or Obama administration (and it’s getting harder and harder to tell the two apart), antitrust rules should be suspended for GM and Chrysler and sensible overhauled for the rest of American companies. This and other deregultory actions that would clear government roadblocks to a recovery — such as those detailed in CEI vice president Wayne Crews’ study “10,000 Commandments” — would be the best “stimulus” of them all.