Smoother path is pushed for defense mergers

April 13, 1994|By New York Times News Service

WASHINGTON -- A federal panel of defense and antitrust experts recommended yesterday that the government reduce procedural obstacles to mergers of defense contractors, but did not propose the partial exemption from antitrust rules that some companies had sought.

The outcome represented a compromise between the Justice Department, which has opposed giving special consideration to armament builders, and the Defense Department, which has become increasingly interested in helping weapons makers cope with a steep drop in orders.

The panel included a lawyer from each agency, as well as military-industry executives and academics.

Industry executives welcomed the report as making it easier to create mergers, but Justice and Defense department officials were much more cautious, saying they were only trying to improve the process.

Bernard L. Schwartz, a panel member and the chairman and chief executive of Loral Corp., a defense electronics producer, said that while he had wanted a change in antitrust rules, he was satisfied with the outcome.

"It defines the antitrust issues that both the industry and government need to focus on," he said.

But Sen. Howard M. Metzenbaum, chairman of the Judiciary antitrust subcommittee and an advocate of antitrust laws, was also satisfied.

"This report assures American consumers that defense industry mergers will continue to get rigorous scrutiny and will be challenged if they are costly and anti-competitive," the Ohio Democrat said.

The panel's main recommendation was that the Defense Department designate one or two of its lawyers to provide advice to the Justice Department on mergers among military contractors, said Stephen Preston, the Pentagon's acting general counsel and a member of the panel.

This would make it easier to advise both the Justice Department and the Federal Trade Commission on such mergers, he said.

But Mr. Schwartz of Loral said the report has produced closer relations between the Defense Department and the antitrust agencies.

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