Review of Industrial Organization
12: 655–685, 1997.
1997 Kluwer Academic Publishers. Printed in the Netherlands.
Merger Policy in the United States:
DENNIS C. MUELLER
University of Vienna, Department of Economics, BWZ-Br
unner Strasse 72, A-1210 Vienna, Austria
Key words: Mergers, antitrust policy, efﬁciency.
JEL Classiﬁcations: L41, G34, L21.
The merger between Boeing and McDonnell Douglas, announced in the closing
days of 1996, will join the last two commercial airplane manufacturers in the
United States, two of the last three major manufacturers in the world. As with
almost all mergers, there is considerable talk of potential synergies and economies
surrounding the merger, and these along with the importance of Boeing as an
exporter and McDonnell Douglas as a defense contractor ensure that the merger
will not be challenged by the antitrust authorities, despite the obvious grounds for
doing so. Indeed, the merger occurs in the midst of the United States’s ﬁfth great
merger wave, a wave that has seen many mergers between giant ﬁrms like Boeing
and McDonnell Douglas, a wave that appears likely to surpass its four predecessors
in terms of the amount of assets acquired (Shepherd, 1997, p. 154).
These ﬁve waves have transformed the structure of American industry over the
last century. No sector or major industry has not been impacted by mergers. Almost
no ﬁrm amongthe verylargest in the economy is not to some extenta productof past
mergers. From time to time Congress has become concerned about the number of
of mergers taking place. Both the 1914 Clayton Act and the 1950 Celler-Kefauver
Amendment to it were passed out of concern that the existing legislation was
inadequate for controlling merger activity. Neither succeeded in preventing future
merger waves, obviously, although the Celler-Kefauver Amendment did arguably
affect the direction of merger activity for a time, when not its volume.
Both Theodore Roosevelt and Woodrow Wilson were able to capture the Presi-
dencyin part on the basis of their advocacyof tough antitrust policies. Congressman
Celler and Senator Kefauver also capitalized on their reputations for tough antitrust
policy. But no recent Presidential candidate has made an issue out of antitrust poli-
cy, nor does it ﬁgure much in Congressionalraces. Both Congress and the President
seem content to leave to the enforcement agencies the deﬁning and redeﬁning of